Report

Frontier Research Inflation Pre Data for August 2016

​Headline inflation to remain stable at 5.5% YOY; MOM decline expected due to lower F&B inflation

· F&B prices decline in line with historics due to high food supply from peak Yala harvesting season

· Headline inflation expected to contract by 0.5% MOM as a result

In Our Report

· Data released by the Department of Census and Statistics indicated that prices of most categories of vegetables and fish declined during the first three weeks of August. Rice prices were largely stable while prices of fruits saw slight increases. In July, the F&B category recorded a marginal 0.6% MOM growth, while overall headline growth slowed to 0.2% MOM.

· Historically, F&B prices record MOM declines during the month of August, barring 2010. This pattern is expected to continue in August 2016 as prices decrease due to high supplies during the peak Yala harvesting season. While the F&B sector is expected to dampen overall headline inflation, increases in Special Commodity Levies in imported potatoes and big onions could apply some upward pressure.

· Additionally, the 6% increase in bus fares brought to effect on August 1st could also add slightly to inflation in the Transport sub-category. The most recent hike in excise duty on diesel is not expected to translate to higher retail prices and as such we do not expect this move to have an effect on overall inflation.

· Given the above factors, we expect headline inflation to decline by 0.5% on a MOM basis. However, YOY inflation is forecasted to remain stable at 5.5%, similar to the growth seen in July.

The attached report contains detailed charts on specific commodities, including additional graphs containing analyst forecasts on Brent prices, and a comparison of CPC import prices against global Brent prices.

Provider
Frontier Research (Sri Lanka)
Frontier Research (Sri Lanka)

Frontier Research is a provider of economic, industry and company research based in Sri Lanka. Our macro research is used for a variety of purposes, including strategic planning, sales forecasting, risk management, and above all, for investment decision making.

Website- frontiergroup.info 

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