Analysts: Inflation Accelerated in July, Petrol and Holidays More Expensive
14. augusta 2019 9:56
Bratislava, August 14 (TASR) - Inflation accelerated in July 2019, with increasing prices of petrol, holidays and postal services, and seasonal price reductions for food milder than usual, analyst Lubomir Korsnak of UniCredit Bank Czech Republic and Slovakia has stated in a commentary on consumer prices in July.
"The reasons for the July acceleration in price growth should be sought in higher fuel prices, a more moderate seasonal decline in food prices and, as usual, a more rapid increase in regulated prices. By contrast, demand inflation remained unchanged in July at this year's peak," he said.
Regulated prices also contributed to the increase in inflation compared to the previous month, which increased by 0.3 percent compared to June, while year-on-year growth rate accelerated from 4.0 percent to 4.2 percent. The rise in regulated prices in July was due almost exclusively to postal prices - prices of conventional postal services increased by 24.7 percent and prices of financial services at post offices by 13.4 percent. In total, prices at Slovak post offices increased overall inflation by almost one tenth in July.
According to Korsnak, prices of food and non-alcoholic beverages fell as usual in July, but only by 0.3 percent this year. The fall in prices was mitigated by a rise in meat prices (mainly for poultry, sausages and pork). In addition, the seasonal fall in fruit and vegetable prices was significantly more moderate than usual this year.
"Inflation should remain just below 3 percent in the coming months. Higher food prices as well as the continued reflection of higher salaries in prices of services should have a pro-inflationary effect. On the contrary, fuel prices should be anti-inflationary in the coming months, as they've probably reached their peak. Meanwhile, demand inflation pressures should slowly stabilise and may gradually begin to moderate at the turn of the year, under the influence of weakening economic growth. Lower demand pressures should be fully manifested in inflation in 2020, when we expect it to return to just below 2 percent," added Korsnak.
According to Slovenska sporitelna analyst Katarina Muchova, the inflation level in July was mainly due to the prices of services (especially postal services, in recreation and culture - the impact of summer holiday tours) as well as transport prices, which increased by 0.6 percent month-on-month.
"Overall, the prices of services reflect the improving labour market situation and the consequent higher disposable income of households. Conversely, food prices fell by 0.2 percent compared to June, mainly because of lower prices for fruit, vegetables, oils and fats. We expect average consumer inflation of 2.5 percent this year," added Muchova.
The Statistics Office reported that consumer prices in July 2019 increased by 2.9 percent on a year-on-year basis. Compared to June, consumer prices increased by a total by 0.1 percent.