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Inflation cooled off to 1.5% y-o-y in December 2023, down from 1.7% in the previous month as residential rents rose at a slower pace, according to the latest General Authority for Statistics (GASTAT) figures (pdf). This is the lowest recorded rate in over a year. Inflation is now on a seven-month downward trend if you include the rise in November.
The usual suspect: rent. Housing rents were up 9% y-o-y in December, reflecting a 12.1% rise in the price of real estate. Restaurant and hotel prices were up 2.5% in December on an annual basis, while food and beverage prices rose 1.2%.
A treat for shoppers: Clothing and footwear prices declined 4% y-o-y in December — the sharpest decline amongst all items. This was followed by a 3.2% decline in the price of furnishing and household equipment, and a 1.3% drop in transport prices.
On a monthly basis, inflation was basically flat: Consumer prices fell 0.1% m-o-m in December, reflecting the 0.7% m-o-m bump in housing, water, electricity and gas prices compounded by a 0.4% m-o-m uptick in the price of restaurants and hotels.
In line with expectations: Capital Economics expected inflation to slow down to 1.6% y-o-y in December on the back of a drop in food prices, it said in a report on Sunday.
The outlook: Inflation is forecasted to continue cooling down to 1% y-o-y by mid-2024, according to Capital Economics’s report. While it’s possible we could see it tick up again in 2H 2024, it will cool again by the start of 2025, the report read. .
ANNUAL CONSUMER PRICES-
Average inflation came in at 2.3% y-o-y for the full year of 2023 driven by a sustained hike in the prices of housing, water, electricity, gas and other fuels, according to GASTAT’s latest annual average consumer price index (CPI) report (pdf).
That’s a bit slower than expected: While the IMF penciled in a 2.8% inflation for 2023, the Finance Ministry forecasted it to come at 2.6%.
PRODUCER PRICES-
Producer prices rose 3% y-o-y in December driven by a 31% surge in basic chemicals and 14% increase in dairy products, according to the latest GASTAT figures (pdf).
