Highlights

In our last report, we anticipated a tempered July 2024 Inflation numbers, solely based on reform induced base effect. Our forecast proved prescient, as the National Bureau of Statics (NBS) revealed that July Headline Inflation eased to 33.40% year-on-year coming in 34 basis points lower than our projected figure of 33.74% and marking a 79 basis points decline from 34.19% reported in June 2024. This marks the first decline since December 2022, bucking the persistent upward trajectory. On a month-on-month basis, Headline Inflation also eased by 3 basis points, coming in at 2.28% (June 2024: 2.31%).

Outlook

Our outlook for Food Inflation presents a mixed picture. We previously highlighted the waning impact of reforms on year-on-year inflation rate, alongside the anticipated impact of the 150-day duty free import waiver on essential food items. Additionally, the ongoing harvest season is expected to bolster food supply. However, these positive events must be weighed against the potential price distortion caused by the nationwide protest induced panic buying.

Overall, we are not optimistic of a significant month-on-month moderation in the Headline Inflation. However, leveraging the elevated base effect and other factors highlighted above, we project Headline Inflation in August 2024 to moderate further by 123 basis points to 32.17%.

Click here “July 2024 Inflation – Impact of Reform Fades as Headline Inflation Welcomes Decline” to view the full report.