11/08/2011: CPI for July 2011

CSO reported Consumer Prices for July today. Here are some headline numbers and updated charts:

• As measured by the CPI, remained unchanged in the month of July relative to June. There was also no mom change in July of last year. CPI index stood at 103.9 in June and July 2011 relative to December 2006 base and 122.7-122.7 relative to December 2001 base. This compares to index readings of 101.2 in June and July 2010 (2006 base) and 119.4 (2001 base).
  
• As a result of the above monthly movements, the annual rate of inflation remained unchanged at 2.7%.
• The EU Harmonised Index of Consumer Prices (HICP) decreased by 0.2% in the month, compared to a decrease of 0.1% recorded in July of last year. July 2011 HICP index stood at 106.5, down from 106.7 in June, while July 2010 index was 105.4, down from June 2010 reading of 105.5.
  
• The annual HICP inflation was 1.0% in July 2011 relative to July 2010.

• All items CPI, therefore is now running at 2.7% for the third month in a row, down from 3.2% in April 2011. A year ago, All items CPI was showing deflation of -0.1% and July 2010 was the last month of annual deflation in the current crisis period.
  

The most notable changes in the year were increases in

• Housing, Water, Electricity, Gas &Other Fuels (+10.3%) - with significant (over 10%) weight in household spending basket. Increases in this category were led by mortgage interest cost hikes which are now 25.2 up on last year and were 2.3% higher than a month ago (please note, our Financial Regulator and the Gov are not making any concerned statements about mortgages interest costs, while talking about the need to restore lending to the corporate sector). In addition, Electricity is up 4.6% annual, while liquid fuels are up 20.1%. Once again, no concern from the Government, whatsoever, on the issue of these costs increases.
  
• Miscellaneous Goods &Services (+7.2%), driven primarily by hikes in Health Insurance (+21.4% yoy and 0.1% mom). Overall Insurance services costs are now 14.5% up yoy, but down 0.3% mom.
  
• Transport (+3.5%) - also with >10% weight in expenditure basket. Transport costs were primarily driven by 12.8 annual inflation in Fuels & lubricants sub-category (led by 12.6% annual hike in Petrol and 13.7% hike in Diesel), and Transport services (+7.7% yoy and 3.8% mom) where Air transport prices were up 25.0% yoy (+11.8% mom) and Sea transport (+12.5% yoy and 13.3% mom)
  
• Health (+3.4% annual, although there was a decline of 0.1% mom). In this category, Medical products, appliance and equipment sub-category was up 1.4% yoy and down 0.2% mom, while Outpatient services declined 1.1% yoy and 0.1 mom. The real inflation here comes from the Hospital services, where costs are up a massive 9.8% yoy although there was no change mom. Again, I am yet to hear any real concern from the Government on this matter.
  

There were decreases in:

• Furnishings, Household Equipment & Routine Household Maintenance (-2.9% - marking 43rd month of annual decreases in prices in this category, starting from January 2008)
  
• Education (-1.3% - 10th consecutive monthly negative annual reading, by no change in mom inflation), although Primary education costs were up 1.3% yoy, while Secondary education costs were up 0.8% yoy
  
• Clothing & Footware (-0.7% - marking 43rd month of annual decreases in prices in this category, starting from January 2008) and
• Restaurants and Hotels (-0.7% - 26th consecutive monthly negative reading).

Inflation in the state-controlled sectors (sectors with either significant presence of regulated semi-state companies and/or state providers - e.g. education - or with significant shares of taxation measures relative to prices of goods and services - e.g. Alcohol Beverages & Tobacco) was running still ahead of private sectors inflation, with state-controlled inflation running at 1.02% annually, against private sectors inflation running at 0.53% in July. Both measures are down on June readings of 1.04% and 0.57% respectively.

Per CSO, "The annual rate of inflation for Services was 4.0% in the year to July, while Goods increased by 1.0%."