CPI inflation picked up to 1.3% y/y in January from 0.5% y/y in the month before, according to data published by the stat office on Monday. As a result, it recorded its highest level since Oct 2013. Not surprisingly, the biggest contribution to the acceleration came from transport prices, which turned to 3.3% y/y growth, influenced by the higher oil prices. Food price growth quickened to 2.8% y/y affected by the higher international food prices. Communication prices went up by 3.0% y/y due to the higher charges. Moreover, the decline of clothing prices slowed down to 1.8% y/y, after deepening noticeably in December.
Looking at the monthly figures, CPI dropped by 0.6%, because clothing prices fell by 12.6% likely on the back of some seasonal promotions. Overall, data suggest that core inflation accelerated only slightly, implying that domestic demand has not showed significant strengthening yet. Looking ahead, we do not expect to see a flattening of CPI inflation in the coming months as higher international commodity prices should continue to exert a noticeably upward pressure.