Thursday, December 23, 2010

November 2010 CPI

After last month’s “exciting” little excursion due to the hike in tobacco excise duty, things have settled down on the inflation front. Even with that, increases in the price level have steadied at just under an annualised 2.0% since the middle of the year (log annual and monthly changes):


The impetus for November was food and beverage prices, which rose 0.56% in log terms on the month, the fastest pace since August 2008 (2.9% in annual log terms). We’re in no danger yet of seeing the growth-stunting increases of 2008 just yet though:


Given these numbers, consumer inflation has pretty much remained below consensus expectations, as well as my own – I was expecting at least 0.5% higher at this stage of the recovery.

But next year won’t be so lucky – subsidy rationalisation is ongoing, there’s a commitment to raise electricity tariffs, and crude oil prices are already approaching early 2008 levels. In other words, there’s upside risk to the inflation outlook, which in turn puts on the table a further pullback from monetary easing.

Technical Notes:

November 2010 Consumer Price Index report from the Department of Statistics

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