Consumer Prices Declined in July

For the month of July, consumer prices fell 0.3% which represents the lowest rate recorded since February 2011 (when consumer prices fell by 0.4%).

The main reason for the decline in the CPI was the 41.6% decline in the ‘Communications’ division as mobile telephone call rates fell. In addition to this, the index for the division ‘Housing, Water, Electricity, Gas and Other Fuels’ fell by 1.4% which was another major contributor to the decline in the CPI. The decline in that division reflected lower electricity and water rates. Though the most heavily weighted index in the CPI, the increase in the ‘Food and Non-Alcoholic Beverages’ division, which rose 1.5%, was not enough to offset the significant fall in the aforementioned divisions.

The outturn in July puts calendar year to date inflation at 2.8%, while point to point inflation is at 5.5%. Going forward, the expectation is that adverse weather conditions could continue to affect grain production in the US and as a result drive continued increase in grain prices. That said, the expected decline in electricity rates during the month of August could result in further declines in the ‘Housing, Water Electricity Gas and Other fuels’ category. In addition, weak local demand will help to temper the impact of higher Food prices.