In July 2016, consumer prices edged down by 0.3 percent compared to the corresponding period of the previous year. Inflationary processes continued to be benign, as price dynamics remained subdued in most product categories. Slightly lower prices helped preserve the value of wages and pensions, which have underpinned consumption growth and economic expansion.

In comparison to the previous month, prices were down by 0.2 percent, due to the seasonal fall of food prices and lower fuel prices. Inflation remained subdued mainly as a result of low crude oil prices on world markets and favourable inflationary effects from Europe. As crude oil prices are some one-fifth lower compared to the level one year ago, consequently lower fuel prices reduced the inflation rate by 1.1 percentage point. Falling fuel prices have pushed down transport prices which, in turn, also reduced the end-prices of other products. The lower VAT on pork was another factor that dampened prices.

The latest data are in line with the prognosis of this year’s Convergence Programme, which predicts an annual inflation rate of 0.4 percent for 2016.

(Ministry for National Economy)