Central Bank of Uzbekistan publishes factors influencing inflation in 1Q2019

Business Materials 25 May 2019 12:27 (UTC +04:00)

Baku, Azerbaijan, May 25

By Fakhri Vakilov – Trend:

Inflation in the first quarter of 2019, calculated on the consumer price index, amounted to 4.3 percent in Uzbekistan, Trend reports with reference to the report of the Central Bank of Uzbekistan.

The inflation rate was lower by 0.6 percentage points (pp) compared with January-March 2018.

In general, in 1Q2019, the inflation rate was lower than expected and was formed under the influence of seasonal factors from the supply of certain types of food, expansion of the taxable base of VAT and a slight weakening of the national currency.

Central Bank reports that the main driver for inflation, as in previous years, was the rise in food prices, whose contribution to quarterly inflation was 2.8 pp.

In turn, the contribution of non-food products significantly decreased to 1 pp, and the contribution of services was equal to 0.5 pp.

Inflation in the services sector has a “catching up” character, mainly due to the equalization of wages in this sector to the level of the sector of production of traded goods. Further expansion of this effect may continue in the coming quarters.

Food inflation in annual terms, having reached its minimum value over the last two years in January, increased in February-March and by the end of the quarter was recorded at 15.3 percent, which is 0.4 pp higher than the December figure.

During this period, food prices continued to grow due to an increase in the contribution of growth in prices for fruits and vegetables, bakery products, meat and dairy products, as well as prices in the catering sector.

Central Bank notes that the inflationary influence on the prices of fruits and vegetables was caused by such factors as rising costs for cultivation and storage, reducing winter stocks, and exports. In the first quarter, the growth rates of prices for tomatoes, cabbage, onions and carrots accelerated most noticeably, while the prices for potatoes and citrus fruits remained relatively stable.

The increase in the annual growth rate of prices for non-food products in the first quarter was moderate. Thus, non-food inflation fell from 12.5 percent in December last year to 10.4 percent in March, thanks to a reduction in the contribution of such major components as construction materials and clothing.

The general pro-inflationary pressure on non-food products was formed due to the tax reform, increasing import duties and prices for energy resources.

In annual terms, the increase in prices in the main groups of non-food products was lower than inflation, while the prices for printed publications, communications, as well as detergents and cleaning products grew at the highest rates.

Annual inflation in the services sector, having decreased in January to 14.9 percent, rose to 15.7 percent in March. In the first quarter, household services, communication services, recreation, sports and education significantly increased.

Furthermore, the impact of the expansion of the taxable base of VAT on price dynamics is estimated as moderate, in the near future it is expected to be preserved. Most of the regulated prices and tariffs in the period under review remained unchanged.


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