Renewed Jump in Core Inflation Compound Pressure on the Headline Index

• Headline CPI ticked up by 40bps to 13.22% YoY, highest since April 2018
• Core inflation expanded by 42bps to 10.52% YoY, highest since June 2018
• Food index jumped 51bps to 16.00% YoY, dominated by increases in prices of farm produce and staple food prices.

The headline inflation index surprised in the month of August, expanding 1.34% MoM, above 1.24% MoM in July and our estimate of 1.12% MoM following still elevated food prices and renewed uptrend in the ‘All Items less Farm Produce’ (core index). While food prices (expanded on average of 12bps monthly) have dominated the increase in the headline index over the past three months, the core index (declined on average by 6bps monthly) had moderated the impact over the same period. With subsisting pressure on farm produce pushing the food index 14bps to 1.67% MoM in August, the core index increased 30bps to 1.05% MoM. The expansion in the core index reflected increases in the Furnishings (+8bps to 0.925 MoM), Clothing & Footwear (+5bps to 0.95% MoM) and Transport (+3bps to 1.14% MoM) sub-index.