The State Bureau of Statistics will publish today a report on retail prices for January, and due to the abolition of the zero VAT rate and the rise in energy prices, it is estimated that the inflation rate will significantly exceed the level of 5 percent for the first time in four years.
Five macroeconomists who participated in a Hina survey estimate that consumer prices rose by an average of 5.6 percent year-on-year in January. Their estimates range from 4.8 to 5.9 percent.
This would be the highest inflation rate since October 2008, when it was 5.9 percent.
The rise in retail prices on a year-on-year basis could be most influenced by the increase in energy and food prices.
– A significant rise in consumer prices is to be expected, primarily due to the abolition of the zero VAT rate and the increase in administratively determined prices (heating), as well as petroleum derivatives. The intensity of inflationary pressures will certainly be influenced by the lower base from last year, as the average price increase in the first quarter of last year was only 1.5 percent – notes one of the macroeconomists in the Hina survey.
Due to alignment with EU directives, the zero VAT rate was abolished at the beginning of the year, so VAT of 5 percent is charged on products that were previously taxed at that rate, including bread, milk, and medicines.
