Softer deflation in fruit and vegetables, coupled with an increase in the price of eggs (+1.9% WoW vs. +1.6% WoW a week ago), as well as still-elevated milk and butter inflation, led to faster daily price growth during 17-23 September than a week ago. Given the favourable base effect and a milder gasoline prices increase, headline CPI annual growth nevertheless decelerated a notch to 6.2%.
Acceleration in milk and eggs prices might be linked with the bad harvest last year and commensurately expensive fodder, which incentivised farmers to butcher livestock. We doubt this move will proceed for much longer, as a good harvest this year (and consequently lower wheat prices) will likely filter into the real economy in forthcoming months.
As the beneficial base effect is to restrain fruit and vegetable inflation further, we expect soft, supply-driven inflation pressure for the remainder of September. We still see 0.2% MoM growth for September as a whole and YoY growth at 6.1% by the end of this month.