National Bank of Belarus considers external factors to be the reason for inflation increase

In the first quarter of 2020, annual inflation as a whole accelerated as a result of temporary adverse impact of external factors, the National Bank of Belarus stated in a review published on April 30 on dynamics and factors of changes in consumer prices and tariffs. The increase in consumer prices in March amounted to 4.9% in annual terms with the target parameter set for 2020 not more than 5%. The National Bank of Belarus believes that the acceleration of annual inflation is due to the dynamics of basic inflation. The high degree of uncertainty about the further development of the situation in the economy in conditions of unfavourable epidemiological situation has led to an increase in inflation expectations of economic entities. Economic activity slowed down, while maintaining a close to neutral character in relation to inflation processes, the Belarusian state regulator stated. He also noted that the acceleration of basic inflation in the first quarter was influenced, especially by the increase in consumer demand for food and basic necessities. This was due to uncertainty about the future situation of restrictive measures imposed by many countries to combat the spread of coronavirus infection by COVID-19. Read about the differences between coronavirus infection and COVID-19 in the story: Coronavirus SARS - CoV2 Combined with the decline of the Belarusian ruble, which contributed to the growth of devaluation and inflation expectations, these two factors caused the acceleration of basic inflation in March to 4% percent in annual terms. Trend inflation in annual terms for the first quarter increased by 0.2% to 3.8%. The average rate of price increases is 3.9%. This confirms the accelerated increase in prices and tariffs of most items of the consumer basket. The annual growth rate of regulated prices and tariffs in March 2020 amounted to 7.5 percent, which corresponds to the level of December 2019. The largest contribution to their growth in annual terms was provided by the increase in the cost of housing services, automobile fuel, communication services, higher education services, as well as tobacco products, the publication said. In other words, the greatest contribution to the increase in inflation was provided by Belarusian state monopolies, state organizations and state-controlled economic entities producing sub-excise goods. The publication of the National Bank noted that the consumer market remains ahead of the growth of prices for cereals (10.4%), as well as dairy products (7.5%). Read the story news: Economic crisis in Belarus The reduction of real GDP in the first quarter by 0.3% the state regulator linked to the reduction of output in export-oriented industries. The National Bank specified: The temporary suspension of exports of oil refineries due to significant shortages of Russian oil to the country, the low volume of exports of potash fertilizers, as well as the decline of business activity in the countries of trading partners led to a reduction of net exports of goods and services in the first quarter of 2020 and acted as the main f.