Morocco’s CPI fell 0.1% y/y in June, narrowing from a 0.3% yearly deflation the month before, on falling food, health and telecom prices that offset growing transport and education costs, the statistics office HCP said on July 22. The negative reading is the second since late 2011 and fully accommodates the central bank’s stance by keeping its policy rate intact at 3.0%.

The CPI inflation is expected to remain subdued, reaching 0.9% in 2014 and 1.3% on average over the forecast horizon before slightly quickening to 1.5% by Q3 2015, the central bank projects.

In January-June 2014, the CPI averaged 0.3% y/y.

On a monthly basis, however, the CPI rose 0.2% in June, reversing a similar drop a month earlier.

Food prices (45% of basket) rose 0.6% m/m in June, helping trim the annual deflation to 1.7% y/y from 2.3% y/y in May. Food charges have likely increased during the fasting month of Ramadan that ends on July 28, meaning the CPI might swing into positive territory in the near term.

Fresh vegetables prices grew 3.3% m/m in June (down 4.3% m/m in May) and those of fish items rose 1.9% m/m.

Transport prices rose 0.3% m/m in June, lifting the annual growth to 3.4% y/y from 3.0% in May, as the government upped fuel costs during the month. The prices of diesel, fuel oil and gasoline are now being reviewed twice a month depending on the crude oil prices on the international market.

Housing prices (13% of basket), which include rents and utilities, grew 0.9% y/y in June. Telecoms costs dropped 9.0% y/y, the same as in May.