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HEADLINE INFLATION UP TO 3.9%

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MBABANE- Headline inflation rate in the past month was recorded at 3.9 per cent.

This is the annual percentage change in the consumer price index (CPI) in August 2020 compared with that of the same period in 2019.
According to figures from Central Statistical Office (CSO), the annual rate corresponded to the same 3.9 per caent observed in July 2020. The month-on-month inflation rate change is 0.3 per cent.
The higher headline inflation was attributed to increasing annual rates of change reflected in August in the price indices for miscellaneous goods and services which increased from -0.7 in July 2020 to 0.8 per cent.
Other contributors included products for personal care.


Clothing and foot wear increased from -0.1 per cent in July to 0.9 in August 2020. Footwear (namely shoes) mainly contributed to the higher index in this category. Transport increased from 1.7 to 2.3 per cent in August 2020,” reported CSO.
 The increasing rates were slightly counteracted by decreasing rates of growth in the price indices for education. The latter decreased from 9.6 to 6.8 per cent in August. Tertiary education contributed to the decreased index in this category.


Measure


Meanwhile, headline inflation is simply a measure of the total inflation within an economy, including commodities such as food and energy prices which tend to be much more volatile and prone to inflationary spikes.
On the other hand, core inflation (also non-food-manufacturing or underlying inflation) is calculated from a price index minus the volatile food and energy components.


Present


Headline inflation may not present an accurate picture of an economy’s inflationary trend since sector-specific inflationary spikes are unlikely to persist.
Core inflation represents the long-run trend in the price level. In measuring long-run inflation, transitory price changes should be excluded.
One way of accomplishing this is by excluding items frequently subject to volatile prices, like food and energy.

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