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 (%) | |||
| Weights | m/m | y/y | |
| Headline | 100 | 0.09 | 6.81 |
| 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 |
| Housing, utilities | 15.79 | 0.33 | 8.15 |
| Furnishings, household equipment | 7.78 | 1.60 | 8.69 |
| Health | 2.57 | 0.32 | 6.49 |
| Transportation | 15.38 | 0.41 | 0.92 |
| Communications | 4.38 | -0.01 | 1.19 |
| Recreation and culture | 3.54 | -0.18 | 7.72 |
| Education | 2.53 | 0.51 | 6.15 |
| Hotels, cafes and restaurants | 6.98 | 1.21 | 13.80 |
| Miscellaneous goods and services | 4.60 | 0.10 | 9.31 |
| Source: tuik | |||
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