Consumer prices slightly decreased as food prices and fuel prices declined. Inflation dropped to the lowest level this year but still keeps above 3%. However, core inflation remains negative and supports an idea of further easing of monetary policy. In July, CPI was driven mainly by seasonal price changes. Food prices declined by 1.6% as vegetable prices dropped. Summer sales decreased prices of clothing and footwear by 3.7%. On the other hand, prices of holiday packages and services related to travelling and leisure increased as usually at the beginning of summer holidays. While headline inflation keeps close to 3%, core inflation is still negative. Domestic demand remains in recession and does not generate any pressure on prices. The central bank can go on with relaxed monetary policy, benign inflation can even support an idea of one more rate cut.
PI (Jul): -0.1% mom; 3.1% yoy
Consensus: 0.2% mom; 3.4% yoy
Actual (Jun): 0.2% mom; 3.5% yoy