Inflation Data for November

Bottom line: The CPI for November fell by 0.4%, more than the consensus expectation. However, the primary factors behind the sharp fall were seasonal, in particular the 8% drop in fresh vegetable prices and the decline in hotel and airline prices. The recent storms ensure that fresh produce prices will show an offsetting – or even larger –rise in December. Nevertheless, the underlying trend – highlighted in the continuing decline in the Index of Prices of Manufacturing Output – is deflationary, with only food and housing prices keeping the CPI in the 1-2% range of annual increase.

• The TTR (12-month trailing rate, i.e. the rate of inflation in the 12 months ending in October) rose slightly, to 1.9%, while the index net of fresh fruit and vegetable prices rose by 1.7% and without apartment prices by 1.4% over the preceding 12 months.
• Once again, the headline CPI asked a divergence in the rate of inflation suffered by the top and bottom quintiles – but this time in favour of the latter. The rate of increase for the consumption basket of the top quintile of the Population fell by 0.3%, while that of the bottom quintile – for whom consumption of fresh produce carries a greater weight – fell by 0.5%.

The housing component of the CPI, which measures rental prices, also contributed to the overall decline and fell by 0.3% in November. Apartment prices, measured separately and not included in the CPI, fell by 0.1% in the latest reporting period, bringing the TTR for apartment prices by this measurement to 8.6% — compared to 9.6% in the period measured in October’s report.

 

Graph: Monthly change in the CPI during the 2013

 

 

Graph: Chart of change in the CPI for November   2007-2013 (monthly)