Consumer price inflation slowed to 7.4% year on year in August, from 8% in July and 9.3% in June. The consumer price index (CPI) has continued to track food prices, which are heavily weighted in the index. Food price inflation also accelerated during the first six months of 2010, peaking at 8.5% year on year in June, before falling back to 7.9% year on year in August. The upturn in food prices in 2010 on a year-on-year basis is partly a low-base effect, following a year of food price deflation in 2009.

Prices in the housing, rent and repairs category of the CPI continued to rise quickly, increasing by 16.4% in August, following jumps of 17.3% in July and 16.8% in June, although this marked a slowdown compared with the 24% year-on-year increase in this category in 2009 as a whole. However, price inflation for miscellaneous goods and services has slowed sharply, to 6.4% in July and 5.5% in August, down from 16.1% in June. Inflation in the clothing and footwear category dropped to 3.8% in August, from 3.9% in July. However, prices in the fuel and light category were up by 5.9% in August, after rising by 5.7% in July. The prolonged closure of part of the Thai-Burmese border following clashes between the SPDC and ethnic-minority fighters in August is likely to have pushed up prices for some important items imported from Thailand, including consumer goods such as toiletries, processed foods and electronics. This may not be fully reflected in the CPI data.