Infographic: Inflation slows to its lowest level since the beginning of the year

Source: NSI

Comment:

In June, consumer price inflation slowed significantly to 2.83% year-on-year from 3.51% in May, according to the latest NSI data. This is the lowest inflation rate recorded since the beginning of the year. Inflation is slowing in both food and non-food items, as you can see in the infographic above. In this case, the slowdown in food inflation is the key factor, as in previous months it was the main reason for the overall index to grow by over 3.5%.

The detailed breakdown of the NSI shows that the prices of restaurants and hotels increased the most in June, by about 5.41%, which is not surprising given the start of the summer tourist season. Meanwhile, the most serious drop in prices is reported in communications. Transport prices also started to fall by 0.42% in June, after increasing by 2.46% in May. This is due to the drop in fuel prices last month, compared to the same period in 2018. It should be noted that in June fuel prices also fall on a monthly basis. Given that they currently remain lower than they were in July last year, we can also expect a drop in prices on an annual basis for this month.

June marks the first significant slowdown in inflation to below 3% for the year, which is an important development. Inflation may accelerate in July and the months following due to rising electricity and heating prices. Overall, however, as we have previously noted, in the longer term we expect inflation to slow rather than accelerate, due to the overall slowdown in economic activity given the fact that we are already in the downtrend of the business cycle.

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