Annual inflation decelerated slightly in September as electricity prices declined. In September, prices rose by 23.7%, over the year, and 0.3%, over the month.
Around half of the annual change in prices came directly from higher energy prices, especially electricity and gas. Electricity was 2 times and gas 3.5 times more expensive than a year ago. The prices of motor fuels also grew noticeably.
The increase in food prices accelerated to 24.4 percent. The food industry is forced to raise its output prices, as margins in the industry are small and the share of energy in production costs is high. Food producers see food prices to continue upwards in the coming months.
Households’ assessment of their family’s financial situation over the next 12 months has never been as pessimistic as it is now. The economic situation is expected to deteriorate and unemployment to rise.
The turnover of retail sales is growing at the same pace as inflation, i.e., consumption volumes have not changed significantly. Savings and refugees and tourists have cushioned deteriorating purchasing power’s impact on consumption.
Very rapid price increases will continue in the coming months, although the peak in annual growth rates was probably in August. In October, monthly inflation will probably be negative due to government’s energy subsidies. Prices are expected to grow by 19% this year and another 8% next year.
