After inflation growth of 0.4% mom in October, inflation kept going upwards in November (+0.9% mom) largely supported by increase in housing, water, electricity, gas and other fuels prices (+1.4% mom). Growth was also backed by food and non-alcoholic beverages (+1.2% mom), clothing and footwear (+1.1% mom) and transport (+1.1% mom). CPI came in November 2010 – November 2011 to 8.1% yoy, being largely above the NBS targeted range for November 2011 (4.6%+/-1.5%). The key growth contributors in annual terms were: alcoholic beverages and tobacco (+11.7% yoy) having 4.9% share in the CPI basket, followed by housing, water, electricity, gas and other fuels (+9.9% yoy) with 16.3% share, transport (+9.2% yoy) with 9.7% share, food and beverages (+8.8% yoy) having 37.8% share, and furniture, household equipment, routine maintenance (+8.1% yoy) with 4.5% share. In the period December 2010 to November 2011 CPI came to 7.7% ytd.
Analyst assessment: The November’s inflation is the highest since it started to fall in June this year, showing that the last gas and heating prices hike at the end had its negative impact on the inflation. Yet, entrance into the 2011 targeted band (+4.5% +/-1.5%) was not anyhow expected by NBS, while it confirmed again that CPI is likely to enter the targeted band already in Q1/12. The fact that the year end inflation will end in the single digit zone after 2010’s (+10.3% yoy), weakening aggregated demand and slowing economy, made NBS quite comfortable in decision to cut the key rate further to 9.75%. We see this decision reasonable despite the fact it could trigger some dinar weakening temporarily, which could further overflow on the inflation growth. This is due to raised concern that recession in the eurozone might hinder noteworthy local economy growth.
Source balkans.com
