Inflation slightly up in first month of the year:Inflation inched up to 1.6% in January 2024, slightly up from the 1.5% rate the previous month, according to the latest General Authority for Statistics (GASTAT) figures (pdf). The slight uptick in inflation last month ended a seven-month downward trend seen in most of 2023.

Once again, rent is the culprit: Housing rents were up 9.3% in January, reflecting an 8.2% rise in the price of villas, according to the report, while prices of housing, water, electricity, gas and other fuels spiked by 7.8%. Food and beverages prices were up by 1% on the back of a 3.7% increase in vegetables prices, while restaurant and hotel prices were up 2.4% due to a 2.1% increase in catering services prices.

Furniture, clothes and transportation are cheaper: Clothing and footwear prices declined by 4.1% y-o-y in January — the sharpest decline amongst all items as garment prices plunged by 6.3%. This was followed by 3.3% decline in the price of furnishing and household equipment, and a 1.1% drop in transport prices.

On a monthly basis, inflation was basically flat: Consumer prices marginally rose 0.3% m-o-m in January, reflecting the 1.1% m-o-m bump in housing, water, electricity and gas prices compounded by a 0.3% m-o-m uptick in the price of food and beverages.

The outlook: Inflation is forecasted to continue cooling down to 1% y-o-y by mid-2024, according to a report by Capital Economics in January. While it’s possible we could see it tick up again in 2H 2024, it will cool again by the start of 2025, the report read.

PRODUCER PRICES-

Producer prices rose 4.3% y-o-y in January driven by a 34% surge in basic chemicals and a 12% increase in refined petroleum products, according to the latest Gastat figures (pdf).

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