The price index of consumer goods and services decreased by 0.2% y/y in July of 2014 (vs. +0.3% in June and +0.2% y/y in May), while in monthly terms, consumer prices also inched down by 0.2%, according national stats office GUS. Market consensus was 0.2%, while the ministry of economy's expectations - 0.0% y/y.
Thus, consumer inflation reached a negative value in annual terms for the first time in history. Also, it has remained below the lower end of the central bank's CPI target (2.5% +/- 1pp) for the 18th month.
In July, the biggest impact on the monthly CPI figure came from falls of food prices (by 1.2%) as well as prices of clothing and footwear (by 2.8%), which pushed the index down by 0.28pps and by 0.14pps, respectively. Higher prices in respect of transport (by 0.8%), communication-related fees (by 1.2%) as well as recreation and culture-related prices (by 0.9%) pushed the index up by 0.07pps, 0.06pps and by 0.06pps, respectively.
As for food prices, the most significant declines were seen in the case of vegetables (down by 9.4% m/m), fruits (down by 4.0%) and sugar (down by 3.2%).
Analysts expect annual deflation to be seen also in subsequent months - they deem that the average annual inflation this year may be as low as 0.1-0.2% vs. last year's 0.9%.
Related Articles
Poland’s BGK to begin operations in Ukraine under new cooperation deal
Polish state development bank BGK will launch operations in Ukraine following the signing of a cooperation agreement between the two countries’ economic ministries, reported Ukraine Business News. ... ... more
Ukraine’s NovaPay launches European app for financial services with Polish partner
Ukrainian financial services group NovaPay has launched a European version of its mobile application, aimed at Ukrainians and EU residents, in partnership with Polish payment institution Quicko, ... more
Russian drones targeted Rzeszów airport hub, media claim
Russian drones, which breached Polish airspace in the early hours of September 10, might have been targeting the airport in Rzeszów, which is vital for the West’s military supplies to Ukraine, ... more