National consumer prices continue to decline by 0.7% in October on lower fuel prices

Consumer prices measured by the National Consumer Prices Index fell further into negative territory in October after the index tipped into deflation in September due to repeatedly cutenergy prices.

The national prices recorded a 0.7 percent decline in the twelve months through October 2024, from 0.2 percent decline in prices through September, reflecting the impact of the fuel price cut in early October.

The back to back decline in price indices after remaining at single digit levels for many months reflect the outsize impact fuel prices have on consumer prices.

Prices measured on a monthly basis too fell by 0.5 percent in October similar to the level of decline seen in September. The Monetary Policy Board of the Central Bank is scheduled to meet next week for their last policy meeting for the year to determine if the policy rate should be cut further to create more demand and thereby turn around the current deflation. While there could be an inclination for a cut in the rates, the current policy rates are already delivering the desired objectives by way of sparking more demand for credit and stimulating economic activity.

In October, food inflation came in at 1.3 percent for the year through October 2024, up from 0.5 percent. However, measured on a monthly basis, food prices fell by 0.4 percent.

Prices of vegetables, fresh fish, fruits, eggs, potatoes and a few others in the food basket went up while the prices of coconuts and coconut oil, rice and others declined. Meanwhile, the non-food inflation fell by a faster 2.3 percent in the year through October 2024, from a 0.7 percent decline through September.

The monthly prices fell by 0.6 percent, faster than the 0.3 percent decline in September.

The so-called core prices measured barring the often volatile items such as food, energy and transport decelerated to 1.7 percent in October from 1.9 percent through September.

Central Bank expects the country to exit the current deflation and converge around their medium term target of 5.0 percent by mid next year before potentially overshooting that level slightly thereafter temporarily.