Increasing signs of disinflation in June, but upside risk to prices remains
The headline inflation cooled further to 2.4% in June (May: 2.8%), a 14-month low, matching consensus, but slightly higher than house forecast (Consensus: 2.4%; KIBB: 2.3%)
- The sustained decline in price pressure can be attributed mainly to a moderation in food prices and restaurant and hotel costs. However, it is important to note that prices for the transport component have increased. On a monthly basis, headline CPI remained unchanged at 0.2% (May: 0.2%).
- Similarly, core inflation has also decelerated, reaching a oneyear low of 3.1% YoY (May: 3.5%). The core component eased by 0.2% MoM (May: 0.3%), mainly due to a decline in core transport items (-0.4% MoM; May: 0.2%).
The softer growth in consumer prices was mainly driven by a moderation in the food & non-alcoholic beverages and restaurant & hotel components
- Food & non-alcoholic beverages (4.7%; May: 5.9%): eased further to a 14-month low due to a moderation in prices of food at home (3.2%; May: 4.3%) and food away from home (6.8%; May: 8.1%). On a MoM basis, food inflation slowed by 0.1% (May: 0.5%) due to cheaper fish (-0.3%; May: 0.6%) and vegetables (-0.1%; May: 0.9%) prices.
- Restaurant & hotel (5.4%; May: 6.7%): despite a MoM increase in consumer expenditure in restaurants and cafes (0.3%; May: 0.2%), the component softened to its lowest level since July 2022 due to base effect and a muted MoM increase in the accommodation services index (0.0%; May: 2.1%).
- Transport (0.0%; May: 1.0%): almost fell into a deflation on cheaper vehicle prices (1.9%; May: 2.0%) and a decline in the cost of operation of personal transport equipment (-0.6%; May: 0.5%). Nevertheless, a rebound in price of air fares (6.8% MoM; May: -8.3%) has pushed the component to record a 0.2% MoM increase (May: -0.2%).
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