Belarus Watch: Prices skyrocketed
In June 2024, inflation marked another anticipated increase. Government decisions to hike the costs of utilities, electricity, and fuel have notably driven up service and food prices. The 2023 comparison base and high inflationary expectations also contribute to price growth.
In June 2024, the annual Consumer Price Index (CPI) recorded another expected increase. Higher inflation was triggered by the authorities' resolutions to hike the utilities, electricity and fuel prices, which primarily affected the cost of services and food. June CPI amounted to 5.8% yoy. Food prices rose by 6.4% yoy, non-food goods became 4.5% yoy more expensive, and service costs surged by 6.6% yoy. Monthly inflation stood at 0.6%, with food prices higher by 0.8% mom, non-food goods climbing by 0.4% mom, and services growing up by 0.5% mom.
The core CPI, excluding volatile items, increased by 4.7% yoy, indicating a steady increase.
The hike in utility tariffs and electricity prices, coupled with the ongoing rise in fuel costs, is expected to continue driving prices upwards. Additionally, the population's inflation expectations remained higher than the current CPI figures. In Q1 2024, perceived inflation over the past 12 months was 11.4%, while expected inflation for the next 12 months was projected at 11%. We maintain our forecast and expect inflation to reach 9% by the end of 2024.
In 1H 2024 Belarusian National Bank's interest rate policy remained stable. The key rate, set at 9.5% a year ago, enabled the regulator to maintain financial stability while supporting the real sector and providing households with affordable loans against the background of real income growth. The National Bank of Belarus controlled the volume of lending and the circulation of the Belarusian ruble through interest rate caps for households and legal entities loans and the broad money supply. Interest rate caps for loans have been raised twice since the beginning of the year, from 11.26% for legal entities and 16.44% for individuals to 11.98% and 17.22%, respectively. BYN broad money supply has increased by 5% since 2024 start. Due to the escalating inflation, we expect the key rate to be raised to 10% still in 2024.
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Dorota STRAUCH
Poland Dorota Strauch is leading economic research on Poland from the RBI Branch located in Warsaw. She began working in Polish RBI network bank in 2010. In 2017 she became the Head of Polish Research team. Having a master’s degree in Financial Markets and Banking she deepened her knowledge by becoming the CFA charterholder in 2016. In the following years she has been focusing on improving data analysis skills with the use of Python programming language. Apart from current economic developments in Poland and the CEE region she is particularly interested in the impact of new technologies on the economy, politics and society.
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