The combination of stable economic growth in the first quarter, rising price expectations, and the Ramadan and Eid al-Fitr periods drove a sharp rise in general inflation, from 2,83% (yoy) in April to 3.32% in May. The sharp rise in headline inflation was contributed largely by food prices, which increased 2,02% from April (see Table 1) as a result of increased food consumption during Ramadan and Eid al-Fitr. One development that is quite interesting to note is the increase in core inflation, from 3,05% in April to 3,12% in May, as well as the trend in wholesale prices, which is an early indication of increased consumer optimism after the 2019 election. We remain maintaining the inflation outlook in the range of 3.4-3.6% at the end of 2019, especially because pressure on inflation from domestic factors will be sufficiently suppressed by external uncertainty and its impact on main commodity prices.

Download (PDF, 454KB)