The chart above shows where most of the inflation came from in August. A 9.1% increase in motor fuel prices boosted the transportation component by 3.6% month-on-month. This is likely to repeat itself in September as retail petrol prices have continued to rise, although it may not be as big as indexed fuel excise duties will not kick in again until February next year.
That same semi-annual indexation of excise taxes also means that other price increases are not likely to be repeated next month. Alcohol and tobacco prices, for example, increased 1.3% month-on-month in August. With rising inflation comes an increase in excise taxes. This resulted in an August increase in the price of alcohol and tobacco, six months after excise duties were increased in February. But that won’t happen again until next February, so this component is likely to be much flatter in September.
The real estate component continues to rise strongly: rentals increased by 0.7% month-on-month, the same level as in July, and only slightly below its peak growth in June of 0.9% month-on-month. Some moderation over time is likely. But with supply still limited and demand strong in the face of a growing population, we don’t expect much of a slowdown in the near term.
One factor that was a considerable drag for the second month in a row was recreation. This is a seasonal factor. The end of the Christmas season causes a drop in the prices of hotel rooms and plane tickets. But it doesn’t last. Therefore, this month’s 3.9% month-on-month drop in holiday prices, following July’s 3.3% drop, is likely to turn positive again in September, in line with past trends. .