Report by Monika Kristof
Executive summary
- The annual inflation rate for March 2021 increased to 3.1% from 2.4% recorded for March 2020 (See Figure 1).
- March 2021 recorded the highest annual inflation rate on a 12-month period.
- The main drivers of an increase in the annual inflation rate were, food and non-alcoholic beverages, communications, alcoholic beverages and tobacco, housing, water, electricity, gas and other fuels and furnishings (See figure 2).
- The category of clothing and footwear and hotels, cafes and restaurants recorded a deflation for two consecutive months.
Analysis
- The annual inflation rate for food and non-alcoholic beverages increased from (2.9%) to (6.6%), this was mainly influenced by high demand for food and an increase in meat prices especially beef due to supply constraints.
- The annual inflation rate for communications increased from (1.1%) to (3.3%),this was influenced by the high demand for communication services due to the continuing remote working condition.
- Alcoholic beverages and tobacco annual inflation rate increased from (2.0%) to (3.8.%), this was influenced by an increase in sin taxes imposed by the ministry of finance.
- The annual inflation rate for housing water, electricity, gas and other fuels increased from (-0.3%) to (1.1%),this was due to an increase in the costs of regular maintenance and repair of dwelling.
- The annual inflation rate for hotels, cafes, and restaurants declined from (2.1%) to (-0.2%), this was due by the lack of demand for accommodation services.
- The education category recorded a decrease in the annual inflation rate from (7.6.%) to (0.8%), this was influenced by the decline in the price levels of primary (private) and secondary education (ages 7 to 17 years).
Outlook
- Food and non-alcoholic beverages ,housing ,water electricity, gas and other fuels and communications categories will continue to drive up inflation in the second quarter of 2021.
- We anticipate that the annual inflation rate for April 2021 will increase but trend around 3 %.
Figure1: Annual inflation rate
Figure 2: Categorical analysis Year on Year %
