Inflation grew in November due to foodstuffs and fuels

Analyst expects the rate to gradually slow down next year.

Illustrative stock photoIllustrative stock photo (Source: Sme )

The price increase accelerated in November.

The year-on-year inflation rate amounted to 3 percent in total, up from October’s 2.7 percent. Core inflation reached 2.7 percent and net inflation 1.9 percent, the Statistics Office informed.

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The total inflation was impacted mostly by the prices of foodstuffs, energies and the demand inflation, according to Ľubomír Koršňák, analyst with UniCredit Bank Czech Republic and Slovakia.

Food prices developed quite differently

Related article Consumer prices up by almost 3 percent this year Read more 

“The prices of foodstuffs and non-alcoholic beverages remained in November at the same level as in October, but due to the base effect the dynamics of their annual growth accelerated from 4.8 percent to 5.3 percent,” Koršňák wrote in a memo.

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As he pointed out, the price development of individual food items was quite different in November. While the prices of meat, eggs, milk and cheese, fish, bakery products and vegetables continued increasing, the prices of fruits, oils and fats, and non-alcoholic beverages went down.

As for fuels, the prices of crude oil on the international markets grew slightly in November, also reflected in Slovak petrol stations.

The demand inflation went up by 0.3 percent compared with the previous month, while the dynamics of its annual growth accelerated from 2.6 percent to 2.7 percent, according to Koršňák.

Inflation expected to slow down gradually

Koršňák expects inflation to continue oscillating around 3 percent in December. It should be supported mostly by the strong base effect of fuel prices, he expects.

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Related article Slovak households will pay higher energy bills next year Read more 

“Food prices are also expected to maintain dynamic growth, but it is possible they have already reached the top,” Koršňák wrote, adding that the pressure of demand inflation will be gradually stabilised.

As for next year, demand inflation should have a weaker effect on inflation due to slower economic growth.

“Lower demand pressures should push inflation towards the 2-percent threshold, but we don’t expect inflation to cross this line next year, also due to the increase in the regulated energy prices from January,” Koršňák concluded.

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