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Post Data for Inflation in August 2016

​Headline inflation falls to 4.3% from 5.5% growth in July; 1.7% MOM decline

F&B inflation sees sharpest monthly decline since start of the index, down 3.7% due to high supplies from peak Yala harvesting season.

Inflation Review

Headline inflation recorded its sharpest monthly decline since February 2015, contracting by 1.7% MOM in August 2016. On a YOY basis, inflation slowed to 4.3% from 5.5% growth seen in July. The decline was led by a greater-than-expected drop in F&B prices, which recorded a 3.7% MOM fall. While August has historically been a month which sees declines in F&B prices, this is the largest monthly decline recorded since the start of the index for this category.

The largest declines were recorded in vegetables, fish and rice categories, owing to high supplies received during the peak Yala harvesting season. On a YOY basis, F&B inflation moderated to 5.6% from 8.1% growth in July.

Non-Food inflation on the other hand saw a 0.4% growth over the month, due to a 1.0% MOM increase in the Transport category owing to the 6% hike in bus fares implemented at the start of August. Furthermore, the Clothing & Footwear category also recorded a 1.0% monthly increase.

Core inflation continued to moderate in August, growing by 4.7% on a YOY basis from 5.8% growth seen last month. However, the 12 Month Moving Average ,which was cited as a cause for concern in underlying inflation in yesterday’s Monetary Policy Review, rose to 3.1% in August. A point to note , however, is that the 12 Month Moving Average for Core inflation has now reached a 34-month high of 5%. Nevertheless, the notable slowdown in headline inflation in August should ease overall inflationary concerns to some extent.

The attached Post Data report contains the breakdown in inflation by sub-category of the CCPI and the NCPI.