Economic Analysis - Inflation Is Brewing - DEC 2017
BMI View: Timor-Leste has been gradually moving out of deflation and we expect inflationary pressures to persist amid rising food and fuel prices. In addition, the government's ongoing infrastructure investment programmes are likely to present further pressures on headline inflation and we forecast inflation to average 1.0% in 2017 and 2.5% in 2018.
Inflation has been on a gradual uptrend in Timor-Leste, with headline consumer price inflation (CPI) reaching a high of 1.0% y-o-y in August (compared with -0.3% y-o-y in January). With food prices accounting for approximately 56.7% of the country's inflation basket, we believe that rising food prices are likely to continue placing upside pressures. Higher oil prices and the government's ongoing infrastructure projects will also see headline CPI inch higher over the coming quarters. We thus forecast inflation to average 1.0% in 2017 and 2.5% in 2018 (compared to -1.3% in 2016).
Food And Fuel Prices To Drive Inflation Higher