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Inflation decelerates in May 2017

Inflation, as measured by the change in the National Consumer Price Index (NCPI) (2013=100), which is compiled by the Department of Census and Statistics (DCS), decelerated to 7.1 per cent in May 2017 from 8.4 per cent in April 2017, on year-on-year basis. This deceleration is mainly due to the base effect amid a monthly increase in NCPI. Both Food and Non-food categories contributed towards the year-on-year inflation in May 2017.

 

The change in the NCPI measured on an annual average basis increased to 6.1 per cent in May 2017 from 6.0 per cent in April 2017.

 

When the monthly change is considered, the NCPI increased from 121.0 index points in April 2017 to 121.8 index points in May 2017. This monthly increase was mainly due to the increase in prices of the items in the Food category.

 

Within the Food category, prices of vegetables, red onions, fresh fish, rice and coconuts increased during the month. In the Non-food category, prices of items in Clothing and Footwear; Housing, Water, Electricity, Gas and Other Fuels (Materials for Maintenance); Furnishing, Household Equipment and Routine Household Maintenance; Transport (Tyres, tubes, spare parts and lubricating oil); and Miscellaneous Goods and Services sub-categories increased. Prices in Health; Education and Restaurants and Hotels sub-categories also recorded marginal increases. Prices of certain items within the Alcoholic Beverages and Tobacco sub-category decreased during May 2017. Meanwhile, prices in Communication; and Recreation and Culture subcategories remained unchanged during the month.

 

The NCPI Core inflation, which reflects the underlying inflation in the economy decreased significantly to 4.7 per cent in May 2017 from 5.9 per cent in April 2017 on a year-on-year basis. This decline is due to relatively low monthly increase and the base effect. Annual average NCPI Core inflation also declined from 6.6 per cent in April 2017 to 6.4 per cent in May 2017.

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