by Tunji Andrews

In August 2014, the Consumer Price Index (CPI) which measures inflation recorded an uptick from the previous month. Prices rose by 8.5 percent (year-on-year), up 0.2 percentage points from 8.3 percent recorded in July. This was the sixth consecutive month of a faster increase in the pace of the Headline index relative to the previous month. The faster pace of price increases recorded in the Headline index in August was as a result of increases in the twelve major Classification of Individual Consumption by Purpose (COICOP) divisions that yield the Headline index.

The Food index edged higher to 10.0 percent in August, from 9.9 percent recorded in July. Prices were pushed higher as a result of higher prices in a broad array of Food groups that contribute to the index. Prices were however slowed by a muted increase in the Bread and Cereals group.
Increase in prices in the All Items less Farm Product or Core sub-index continued to be muted for the second consecutive month, after increasing at a faster pace for the previous three months. Prices rose by 6.1 percent (year-on-year), 0.9 percentage points lower from the rate recorded in July.

It should be noted that the Headline Index is made up of the Core Index and Farm Produce items. As Processed Foods are included in both the Core and Food sub-indices, this implies that these sub-indices are not mutually-exclusive.

On a month on month basis, price increases in the headline index slowed for the third consecutive month. Prices slowed by 0.2 percentage points to 0.48 percent in August, from 0.65 percent in July. Prices slowed in all COICOP divisions that yield the headline index except for the Health, Transportation, Education, and Miscellaneous Groups and Services Divisions.

Urban prices increased by 0.2 percentage points, to 8.7 percent (year-on-year) in August. Urban prices have increased at a faster pace for the fourth consecutive month. Rural prices have exhibited the same trend over the period increasing by 0.3 percentage points from 8.1 percent in July to 8.4 in August.

On a month on month basis, the pace of increases in urban prices has slowed for two straight months. The Urban Headline index increased by 0.51 percent in August, roughly 0.2 percentage points lower from July. The Rural All-items index rose at a slower pace by 0.47 percent in August, down from 0.60 percent in July.The percentage change in the average composite CPI for the twelve-month period ending in August over the average of the CPI for the previous twelve-month period was recorded at 8.0 percent, unchanged from the average twelve month rate of change recorded in July 2014. The corresponding 12- month year-on-year average percentage change for the Urban index was 8.1 percent in August, unchanged for the third consecutive month, while the corresponding Rural index increased marginally to 7.9 percent in August.

Food Index
As observed by the Food sub-index, food prices increased by 10.0 percent (year-on-year) in August, marginally higher from 9.9 percent recorded in July. This is the highest price increase (year-on-year) on a monthly basis recoded since July of 2013.

On a month-on-month basis, food prices increased by 0.6 percent in August, down from 0.8 percent recorded in July. On a month-on-month basis, the highest price increases were recorded in the Coffee, Tea and Cocoa; Fruits, Meats, Fish, Oils and Fats groups. The average annual rate of change of the Food sub-index for the twelve-month period ending in August 2014 over the previous twelve month average was 9.5 percent. The twelve month rate of change has held steady for the previous three months.

All items less farm produce
The pace of increases in the “All items less Farm Produce” or Core index, which excludes the prices of volatile agricultural products slowed for the second consecutive month in August. Prices rose by 6.3 percent (year-on-year), down from 7.1 percent in August, and surpassing January’s low of 6.6 percent.

On a month-on-month basis, prices increased at a faster rate in August. Prices rose by 0.4 percent, up by 0.2 percentage points from July. The fastest increases were recorded in the Solid Fuels, Wine; Audio-visual, Photographic and Information Processing Equipment; and Fuels and Lubricants for Personal Transport groups. The average 12 month annual rate of rise of the index was recorded at 7.3 percent for the twelve-month period ending in August 2014, down from the 12 month rate recorded in July which was recorded at 7.3 percent.