Inflation on the rise in March

The headline inflation in March as measured by the year-on-year (YOY) change based on the NCPI has been compiled as 5.1%, up from 4.2% in February.

The Department of Census and Statistics said contributions to the inflation rate of March 2021 from food group and non-food group are 4.0% and 1.1% respectively. Whilst contributions of food and non-food groups to the inflation in March 2020 were 6.0% and 1.0% respectively, it resulted in a headline inflation of 7.0%. 

Comparing the month-on-month changes, NCPI in March 2021 has decreased to 142.1 from 142.8 reported in February 2021. This shows a decrease of 0.7 index points or 0.5% as compared to February 2021. The month-on-month change was contributed by decrease of index values of food items by 0.63% and increase of index values of non-food items by 0.16%. 

Price decreases of food items were reported for vegetables, green chilies, red onions, coconuts, potatoes, limes, tamarind, big onions and eggs. However, increases in index values were reported for green gram, fresh fruits, chicken, cowpea, garlic, coconut oil, rice, Mysore dhal and fresh fish. 

The increases in index values of non-food groups in March 2021 compared to the previous month was mainly due to the price increases in groups of items ‘Restaurants and Hotels’, ‘Alcoholic Beverages, Tobacco and Narcotics’ (betel leaves and tobacco – chewing), ‘Clothing and Footwear’, ‘Transport’ (lubricating oil and cost of servicing of vehicles) and ‘Furnishing, Household equipment and Routine household maintenance’. 

Further, very slight price increases were reported in groups of ‘Housing, Water, Electricity, Gas and Other fuels’, ‘Health’ and ‘Miscellaneous Goods and Services’ as well. Meanwhile, the price indices of ‘Communication’, ‘Recreation and Culture’ and ‘Education’ groups remained unchanged during the month.

Core inflation, which reflects the underlying inflation by excluding volatile items of food, energy and transport groups in the economy as measured by the YOY change based on NCPI for the month of March 2021 has increased to 4.3% from 4.1% in February 2021.