Headline inflation expanded by 13bps to 11.98% year on year in December 2019

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In line with analyst expectations for continued pressure from both the food and core inflation, consumer prices firmed by 11.98% y/y in December 2019, the highest since May 2018. The outturn is 13bps higher than the prior month (November: 11.85% y/y) and 7bps shy our estimate (12.05% y/y). On a month-on-month basis, the headline inflation receded by 18bps to 0.85%, the second consecutive months of decline.

Food inflation rose by 19bps to 14.67% y/y in the period under review, as the low base from the corresponding period in the prior year took a toll on food prices. Notably, the highest increases were recorded in prices of Bread and cereals, Oils and fats, Meat, Potatoes, Yam and other tubers, Fish and Vegetables.  On a month-on-month basis, food prices eased by 27bps to 0.98%, as the initial impact of the border closure continues to fade.

Also, core inflation widened by 33bps to 9.32% y/y, the highest since March 2019. Pressures were most significant in prices of Cleaning, Repair and hire of clothing, Repair of household appliances, Hospital services, and Major household appliances, Similarly, from a month ago, the core index increased marginally by 1bp to 0.80%.

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