Another High Inflation Print In October at 5.7%
Key Summary:
- Inflation remains elevated at 5.7% in October
- Food inflation weighed down on general inflation for 3 consecutive months
- Transport inflation remains sticky
Oct-22 printed an inflation rate of 5.7% YoY, slower than 6% YoY in Sep-22 but nonetheless it was still elevated. The slower rate was attributed by lower food, beverages and tobacco which was down for 3 consecutive months since Aug-22 mainly from lower food prices. But we believe this is temporary, as seasonally 3Q-4Q should see lower food prices due to harvesting season (but general capacity to produce is less and less next year) and slower demand post Eid holiday, so this is expected. The lower food price has also been contributed from chicken prices, however, we think this is at the expense of producers as their cost of raw materials such as corn are increasing and eroding their margins. Hence, any pick-up in demand would see producers start passing on higher prices to consumers, elevating inflation.
