By Monika Kristof
Executive summary
- The annual inflation rate for July 2021 increased to 4.0% up from 2.1% recorded for July 2020. See Figure 1
- The main drivers of an increase in the annual inflation rate were transport, furnishings, household equipment and routine maintenance of the houses, housing, water ,electricity, gas and other fuels and clothing and footwear. See figure 2
- The category of clothing and footwear recorded a deflation for July 2021
Analysis
- Transport category recorded a huge increase in the annual inflation rate from (-1.2%) to (10.6%), this was mainly influenced by high costs of operation of personal transport equipment and a high input cost for vehicles
- Furnishings, household equipment and routine maintenance of the house recorded an increase in the annual inflation rate from (2.3%) to (5.8%), this was influenced by an increase in the prices of household textiles, carpets and other floor coverings and glassware, tableware and household utensils
- The annual inflation rate for housing, water, electricity, gas and other fuels increased from (-1.5%) to (1.2%), this was due to an increase in the costs of regular maintenance and repair of dwellings
- The annual inflation rate for the clothing and footwear category declined from (-4.3%) to (-3.0%), this was influenced by an upturn in demand for clothing and footwear
- The annual inflation rate for hotels, cafes, and restaurants increased from (0.8%) to (1.1%), this was due to the ease of Covid-19 restrictions
- The annual inflation rate for recreation and culture declined from (6.5%) to (2.1%), this was influenced by high prices of audio-visual, photographic and data processing equipment including repairs and a lack of demand for holiday packages
Outlook
- We project that the annual inflation rate for August 2021 will increase due to high cost-push factors with added pressure on the supply side by the vaccine roll-out. In particular, prices for vehicle related input, personal transport equipment and food products will remain elevated for the time being as supply chains (both domestically and abroad) converge back to pre-pandemic conditions
Figure1: Annual inflation rate
Figure 2: Categorical analysis Year on Year %
