Monday, November 25, 2013

October 2013 Consumer Prices

October consumer prices accelerated slightly in October (log annual and monthly changes; 2000=100):


Unlike September though when prices were driven by the cut in petrol subsidies, much of the increase this time comes from higher core inflation, specifically the hike in excise duty for tobacco products (log annual and monthly changes; 2000=100):


Although the weighting is low, the increase was massive enough to move the entire CPI upward. You can see that the impact on this sub-index is almost entirely due to taxation – notice the step-wise movement in growth.

Even given that the cuts in subsidies and hike in taxes are essentially one-off measures, CPI inflation will continue to remain elevated from the base-effect:


Even if CPI inflation falls back to “normal” (about +0.02% a month) over the next couple of months, it means CPI inflation will breach the 3.1% mark for December.

And before anybody asks, there’s no implication from any of this on monetary policy.

Technical Notes:

October 2013 Consumer Price Index report from the Department of Statistics

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