January 2010 CPI

Along with the 4Q2009 GDP report, we had two other stat releases yesterday: Jan 2010 CPI and BNM’s Jan MSB. I’ll cover the latter after updating my databases.

For inflation, inflation has largely returned to its long term trend (index numbers; 2005=100):

You can get a stronger indication from the core inflation series (ex-food, ex-transport; 2005=100):

The growth numbers look pretty benign, apart from the unsightly hump created by the rise in the market price for petrol in June 2008 (log annual and monthly changes; 2005=100):

Given the fairly steady rise in the CPI, I thought it might be interesting to see what the long term trend is like. Using a dummy to take out the inflation effects of the 2008 fuel price hikes (value=0 for 2008:5 to 2008:12), and a sample range from 2004:1 to 2010:1 (there appears to be a structural break between 2003 and 2004), I got 0.235% for the CPI and 0.130% for the Core measure. That roughly translates to an average of 2.86% and 1.57% per annum:

Right now, both the CPI and Core measures are generally running below those averages, indicating continued slack in the economy (no surprise). But this is a useful benchmark to figure out whether inflation is under control or getting out of hand – or changing path entirely.

Technical Notes:

Consumer Price Index Report from the Department of Statistics