by Tunji Andrews

In July 2014, the Consumer Price Index (CPI) which measures inflation, edged higher from the previous month. Prices rose by 8.3% (year-on-year), up by 0.1 percentage points from 8.2% recorded in June. This is the fifth consecutive month of year-on-year increases in the Headline index. The faster pace of price increases recorded in the Headline index were as a result of an increase in multiple divisions that contribute to the Headline index.

Between February and July, movements in food prices as observed by the Food sub-index have mirrored the Headline index. The Food index edged higher to 9.9% in July from 9.8% in June. Prices were pushed higher as a result of higher prices in the Bread and Cereals, Meats, and Fish groups, while the pace of the increase was weighed upon by slower increases in the Dairy, Sugar, jam, honey, chocolate and confectionery; and Coffee, Tea and Cocoa groups.

After increasing at a faster pace for the previous three months, the pace of price increases measured by the “All items less farm produce” or Core sub-index eased in July. Prices rose by 7.1% (year-on-year), a full percentage point lower from the rate recorded in June. Slower price increases in the Alcoholic Beverages Tobacco and Kola; Clothing and Footwear; Housing Water, Electricity.

Gas and Other Fuel; and many other divisions contributed to the muted increases in the Core sub-index.

On a month on month basis, price increases in the headline index eased for the second consecutive month. Prices increased by 0.65% in July, lower from a 0.77% increase in June. The slower price increase of the Headline index in July were driven by a slower rise in all areas that contribute to the index.

Urban prices (year on year) increased as a faster pace for the third consecutive month in July. Prices edged higher to 8.5%, up 0.1 percentage points from June. Rural prices have exhibited the same trend over the period increasing by 8.1% from 8.0% in June. On a month on month basis, the pace of increases in Urban prices eased in July after advancing faster for two consecutive months. Urban Headline index increased by 0.70%, 0.1 percentage points lower from June.

The Rural All-items index rose at a slower pace by 0.60% in July, down from 0.74% in June.

The percentage change in the average composite CPI for the twelve-month period ending in July 2014 over the average of the CPI for the previous twelve-month period was recorded at 8.0%, unchanged from the average twelve month rate of change recorded in June 2014. The corresponding 12-month year-on-year average percentage change for the Urban index was 8.1% in July, unchanged in the previous month while the corresponding Rural index eased to 7.8% for the Month of July.

Food index

As observed by the Food sub-index, food prices increased by 9.9% (year-on-year) in July marginally higher from 9.8% recorded in June. This is the highest price increased observed in a year, and an advancement in the pace of price increases for the fifth consecutive month. During the month, increases in Fruit, Vegetables, and Potatoes, Yam & Other Tubers groups contributed to the price increases.

On a month-on-month basis, food prices increased at approximately the same rate of change for four consecutive months by 0.8%.

On a month-on-month basis, the highest price increases were recorded in the Fruits, Meats, Fish, and Potatoes, Yam and Other Tuber groups. The average annual rate of change of the Food sub-index for the twelve-month period ending in July 2014 was 9.5%, unchanged from the previous month.

All items, less farm produce

After increasing for three consecutive months, the pace of increase of “All items less Farm Produce” or Core index, which excludes the prices of volatile agricultural products slowed in July. Prices rose by 7.1%, down from 8.1% in June. This is the slowest price increase recorded since January this year.

On a month-on-month basis, price increases also slowed to this year’s low, as prices rose by 0.2%, down by 0.5 percentage points from June. The increase in the Core sub-index (month-on-month) was as a result of price increases across various group items in particular, actual and imputed rentals for housing; Non-durable household goods; Clothing materials, other articles of clothing and clothing accessories; Garments, and Solid Fuels groups. The average 12 month annual rate of rise of the index was recorded at 7.4% for the twelve-month period ending in June 2014, unchanged from the previous month’s 12 month annual rate of change.