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Frontier Inflation Pre-Data - September 2016

​Headline inflation to remain steady at 4% levels in September

• Marginal decline of 0.1% expected over the month owing to our expectation of a slight decline in the F&B category
  
  

• YOY inflation to grow by 4.1% from 4.0% in August

In our Report

• Last month, the Food & Beverage category recorded its highest monthly decline as almost all major food categories, except for fruits, saw notable declines in prices due to high supplies from the Yala harvesting season. Price data released by the Department of Census and Statistics(DCS) for the first two weeks of September indicated that prices of most categories of vegetables saw slight decreases, while fruits and fresh fish prices saw increases. Rice prices however saw mixed movements. During the latter half of September, however, market information indicated that supplies had begun to reduce.
  
  

• Historically, the month of September sees MOM declines in the F&B category (except for 2010 and 2011), therefore we expect that this trend would continue this year as well. However, we expect only a marginal decline in this category this month due to some upward pressure from lower supplies being reported specifically in vegetables, fresh fish and fruits, as well as increases in import levies in big onions and potatoes during end August.

• We do not expect any major movements in the Non-Food categories this month.

• In line with the above assumptions, we expect headline inflation to decrease by a slight 0.1% over the month, while YOY inflation would rise to 4.1% from 4.0% growth seen in August. This is comfortably within the IMF’s target bands of 3% to 6% for September.

• The attached report contains detailed charts on specific commodities, including graphs containing analyst forecasts on Brent prices, and a comparison of CPC import prices against global Brent prices. We have also updated our inflation forecast for 2017.