Risks and prospects
- The CPI inflation growth rate in the last month of 2022 surprised us with the uncharacteristic slowdown in consumer price growth rates in December.
- The declining volume of the household’s real incomes probably contributed to a more restrained household consumer demand in December, despite its usual growth on the eve of the preparations for the New Year.
- The observed slowdown in price growth is not a sign of an inflationary cooling yet. The continued acceleration of core inflation indicators and the deterioration of inflation expectations are signals of a long-term trend of higher prices and different rates with directions of prices of consumer goods and services.
- Entered into force on January 1, 2023, new values of the key calculated indicators may give an additional short-term inflationary impulse due to an increase in the household’s nominal income.
- According to our forecasts, inflation in annualized terms will continue to accelerate during the first quarter of 2023. And in the future, prices will slowly decline if there are no additional growth triggers.
- Following the estimates, the current high inflation and the restraining monetary conditions supported by the regulator will reduce the consumer spending plans of all economic agents during the first half of the year.
- We expect a slowdown in price growth in annualized terms to 14.2-16.8% by the end of 2023, which will be mostly explained by the maintenance of monetary conditions close to restraining, the technical effect of the high base of last year, as well as the gradual mitigation of impacts of the excessive demand and lack of supply in the domestic market.
- Potential price spikes for the production, purchase and logistics of goods caused by external factors with new geopolitical threats are still among the key risks and may contribute to maintaining increased rates of price growth in the coming months of 2023.
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