Inflation expectations are still above the desired levels and exchange rate movements delay the improvement in the core inflation indicators, said the central bank on August 19 in a presentation to economists.
On the positive side, food and energy price developments help disinflation in the short run, while the decline in import prices limits the pass-through from exchange rates to domestic inflation, the bank noted.
End-year inflation expectations declined to 7.65% in August from 7.71% in July, the central bank’s latest expectations survey showed.
At the monetary policy committee meeting on August 18, the central bank kept the benchmark rate (one-week repo) kept at 7.5%, while it held the ON borrowing and ON lending rates steady at 7.25%, and 10.75, respectively.
Here are the other highlights from the bank’s presentation:
* GDP continues to grow at a moderate pace, driven mainly by consumption expenditures.
* Consumer confidence and investment tendency point to a moderate private domestic demand.
* Exports and imports continue to decline in USD terms, reflecting the movements in USD/Euro exchange rate, slowdown in global demand and geopolitical developments.
* The favourable impact of lower oil prices on the current account balance will be more pronounced in the forthcoming period.
* Further improvement in current account balance is expected in the forthcoming period.
|July CPI by Main Expenditure Groups (%)|
|Food and non-alcoholic beverages||24.25||0.28||9.25|
|Alcoholic beverages and tobacco||4.82||1.16||3.28|
|Clothing and footwear||7.38||-4.97||4.06|
|Furnishings, household equipment||7.78||1.60||8.69|
|Recreation and culture||3.54||-0.18||7.72|
|Hotels, cafes and restaurants||6.98||1.21||13.80|
|Miscellaneous goods and services||4.60||0.10||9.31|
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