The CBE has disclosed the factors behind the decrease in inflation for March, despite the exchange rate liberalisation and the surge in fuel costs.
In March 2024, the annual headline urban inflation rate fell to 33.3%, down from 35.7% in February 2024. This reduction is largely due to the subdued inflationary trends observed throughout March 2024, which saw minimal price rises across various sectors, coupled with a favorable base effect.
This trend is propelled by the drop in annual food inflation, which stood at 45.0% in March 2024, the lowest since December 2022. This downturn may indicate a gradual mitigation of the food inflation spike that reached its zenith at 73.6% in September 2023.
Moreover, the annual non-food inflation rate remained relatively stable at 25.7% in March 2024, a modest dip from 26.1% in February 2024.
Annual core inflation also slowed down, registering 33.7% in March 2024 compared to 35.1% in February 2024. This slowdown reflects a lesser impact from core food prices and aligns with the monthly core inflation rate of 1.4% in March 2024, versus 2.5% in the corresponding month of the previous year.
The monthly headline urban inflation rate hit a low not seen in over a year at 1.0% in March 2024, a significant fall from 2.7% in the same period last year and a stark contrast to the 11.4% recorded in February 2024. Notably, Ramadan’s seasonal effects led to modest price hikes in certain categories, such as core food items (notably poultry) and services (including Umrah trips). Additionally, slight price increases were observed in other service sectors like dining establishments, healthcare (both private and public), and cafes.
The rural annual headline inflation rate decreased to 32.8% in March 2024 from 36.3% in February 2024. Concurrently, the nationwide annual headline inflation rate dropped to 33.1% in March 2024 from 36.0% in February 2024.
Fresh vegetable prices saw a 4.8% reduction, while fresh fruit prices remained mostly unchanged. These contributed a negative 0.19% to the monthly headline inflation rate.
Poultry and red meat prices rose by 3.3% and 1.0%, respectively, jointly contributing 0.28% to the monthly headline inflation rate.
Dairy product prices increased by 2.2%, adding 0.10% to the monthly headline inflation rate.
Market sugar prices went up by 5.1%, contributing 0.03% to the monthly headline inflation rate.
Fish and seafood prices climbed by 1.2%, also contributing 0.03% to the monthly headline inflation rate.
Conversely, prices for pulses and edible oils fell by 3.8% and 1.8%, respectively, collectively subtracting -0.04% from the monthly headline inflation rate.
Other core food items, including eggs, market tea, coffee, dried fruits, and bread, experienced price increases, contributing 0.10% to the monthly headline inflation rate.
Service prices rose 1.4%, accounting for 0.38% of the monthly headline inflation rate. This increase was primarily due to higher spending on restaurants and cafes, outpatient services, private healthcare, rental values, and the seasonal influence of Umrah trips.
Retail item prices increased by 1.5%, contributing 0.20% to the monthly headline inflation rate. This was largely influenced by medical products, apparel, household cleaning items, and personal care products.
Regulated item prices saw a 0.4% uptick, adding 0.07% to the monthly headline inflation rate, mainly due to medical products and public healthcare services.
The Monthly Core Inflation experienced fluctuations due to the price variations in core CPI components. Core food items were significantly impacted, adding 0.66% to the monthly core inflation. Services also played a major role, contributing 0.50%. Meanwhile, retail items were responsible for a 0.26% increase in the monthly core inflation figures.
