Increase in Food Prices Delivered Another Jump in Headline Index

• Headline CPI ticked up by 24bps to 12.81% YoY, highest since April 2018
• Core inflation moderated by 3bps to 10.09% YoY
• Food index jumped 32bps to 15.49% YoY, dominated by increases in prices of farm produce and staple food prices.

As mentioned in our Monthly Economic Insights published last week, we stated the trend in inflation in the month of July will mirror similar pattern in June. Similar to the month of June, decline in market supplies of staple foods and farm produce resulted in a jump in the inflation rate in the month of July. Data released this afternoon by the National Bureau of Statistics showed food inflation expanded month-on-month by 1.54% – the highest MoM increase since June 2018. Largely, most of the increase in the food index emanated from higher prices of farm produce. For context, while the headline index expanded 1bps to 1.23% MoM in July, the headline index excluding farm produce contracted 11bps to 0.75% MoM and when further adjusted for energy related cost, the headline index fell 12bps in July. Surprisingly, while imported food increased by 2bps to 1.29% MoM, processed food prices contracted during the month. The decline in the core index by 11bps to 0.75% MoM, negates increases in its constituents – HWEGF (+2bps to 0.75% MoM), Transportation (+5bps to 1.09% MoM) and Communication (+3bps to 0.82% MoM).