MONTHLY (SEPTEMBER) ECONOMIC REVIEW

1.0 Inflation Developments

Annual headline inflation rose further to 14.1 percent in August 2011 from 13.0 percent recorded in July 2011, due to rise in food prices (Chart 1.1). On the other hand, month-to-month headline inflation decreased to 1.4 percent in August 2011 from 1.5 percent recorded in the preceding month. Annual inflation for food and non-alcoholic beverages was 18.6 percent in August 2011, up from 14.8 percent recorded in the preceding month, with most of the increase coming from the prices of rice, bread, pastry cook products, maize grains, wheat flour, cassava flour, pork meat, chicken, fish, fresh cow milk, fruits, vegetables, potatoes, cassava fresh and sugar. Likewise, month-to-month food inflation rose to 2.4 percent in August 2011 from 1.7 percent in July 2011. Annual non-food inflation decreased to 10.2 percent in August 2011 from 10.8 percent in July 2011. This development was associated with the decline in prices of some items including clothing materials, kerosene, charcoal, diesel, petrol, household utensils and appliances, passenger transport, internet, and accommodation services. Similarly, month-to-month non-food inflation declined to 0.4 percent in August 2011 from 1.5 percent recorded in July 2011. Annual core inflation (excluding food and energy) decreased slightly to 7.3 percent in August 2011 from 7.4 percent in July 2011. Similarly, month-to-month core inflation fell to 0.4 percent in August 2011 from 0.7 percent in July 2011

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