CPI inflation picked up to 3.9% y/y in August, registering its highest level since Nov 2012, data of the stat office showed on Thursday. The highest contribution to the acceleration came from food prices, whose increase quickened to 6.4% y/y, influenced by the higher international food prices. Housing prices growth steepened further, affected by the higher electricity prices. Moreover, alcohol price went up by 11.1% y/y, as part of the stocks of alcohol accumulated before the excise tax hike were exhausted and thus alcohol prices increased further. We recall that the alcohol prices growth steepened tangibly to 10.0% y/y as big part of retailers increased alcohol prices using the gathered alcohol stock to increase profits by the excise duty raise. Transport prices accelerated further their growth to 4.8% y/y, affected by the higher oil prices. On the other hand, the increase of recreation prices slowed down to 1.5% y/y, while clothing prices fell by 0.5% y/y, likely influenced by weaker household consumption.
In monthly terms, CPI rose by 0.4%, following 0.7% increase in July. The increase was entirely driven by higher clothing and housing prices. Looking at the 12-month rolling figures, CPI inflation came in at 2.2% y/y. Looking ahead, we believe that CPI will continue to increase by more than 3% in y/y terms, underpinned by the excise tax hike and higher international commodity prices. In the meantime, moderate household consumption will likely prevent significant acceleration of the inflation. Thus, we believe that the average 2017 CPI inflation will be close to central bank’s projection of 3.2%.