The spike in the growth of milk prices in 2-9 September smoothed in the following days, showing that this sudden upturn was only temporary. However, they continue to grow rapidly (+0.8% WoW vs. +1.4% WoW a week ago), adding tangibly to headline inflation. Nevertheless, over the reported period gasoline and egg prices again became the major CPI WoW growth drivers.
The YoY growth in headline CPI remained at 6.3% as of 16 September, despite the ongoing seasonal deflation in fruit and vegetables, as well as the favourable base effect in utilities (over the same period in 2012, there was the chain effect of the growth in tariffs on 1 September).
As the beneficial base effect is to contain fruit and vegetables inflation further, we expect softer inflation in the remainder of September. We now see 0.2% MoM growth for September as a whole and YoY growth at 6.1% by the end of this month, given the unexpected spike in milk prices and the slow pace at which they are normalising.