Jason Muscat | FNB
September CPI printed in line with our expectations, at 5.1% y/y from 4.8% in August, and gained 0.5% m/m. The jump above 5% was largely anticipated by the market given the 67c increase in the fuel price last month. Petrol jumped 12.2% y/y from 5.7% the previous month, while transport increased 5.6% y/y from 3.9% in August.
Food and non-alcoholic beverage inflation moderated to 5.4% y/y, with bread and cereal prices contracting -2.8%. Meat prices, which rose 15.6%, continue to climb, and the outbreak of avian flu could push out the peak by a few months. Housing and utilities inflation expanded 4.9% y/y from 4.5% in August, with both actual rental prices increasing 5.7%. We expect the above 5% print to be temporary owing to base effects, and expect October CPI to dip just below the 5% level. Overall, weak economic growth, low consumer and business confidence and stretched consumers means there is simply not enough demand to spur inflation higher.