The national bureau of statistics today released the Headline Inflation figure for the month of August, according to the report, the Consumer Price Index (CPI) which measures inflation increased by 17.6% (year-on-year), 0.5% points higher from the rate recorded in July (17.1%). Increases were recorded in all COICOP (Classification of Individual Consumption According to Purpose) divisions which contribute to the Headline index reflecting higher prices across the board.
The major divisions responsible for accelerating the pace of the increase in the headline index were Housing, Water, Electricity, Gas and Other Fuel, Education and Transportation Services. The Food Index rose by 16.4 percent (year-on-year) in August, up by 0.6 percent points from 15.8 percent recorded in July.
During the month, all the major food groups contributed to the increase in the Food sub-index, however the pace of increase was slowed by Fruits, Potatoes, Yam and other Tubers as well as Oils and Fats, which reported slower increases during the month. Imported foods on the other hand as reflected by the Imported Food Sub-index increased by 0.2% points from July to 20.7% in August.
We do not expect the increased figure to have much impact on both the Fixed Income and Equities market as the two systems seem to have prepared for the increase before now. Nevertheless, it should be noted that at the next Monetary Committee Meeting (MPC) on the 19th and 20th September, 2016, key economic parameters to deliberate on includes the persistent inflationary pressures, declining output, and unabated FX scarcity.