BAKU, Azerbaijan, Mar. 11
By Klavdiya Romakayeva - Trend:
The Board of the Central Bank of Uzbekistan (CBU) decided to keep the base rate unchanged at 14 percent per annum, Trend reports with reference to the CBU.
It is reported that this decision was made in order to continue the current course of monetary policy in Uzbekistan aimed at achieving an interim inflation target below 10 percent in annual terms in 2021 and a sustainable recovery in economic activity, as well as creating conditions for reducing inflation expectations.
The CBU reports that the inflation rate slightly accelerated in Uzbekistan from January through February 2021 and amounted to 11.6 percent and 11.4 percent, respectively, under the influence of seasonal factors and rising food prices.
According to the information, growth in food prices continues to make the largest contribution to overall inflation. The annual growth in prices for this group remained significantly higher than the general level and amounted to 14.6 percent, increasing headline inflation by 6.19 percent.
Following the baseline forecast of the CBU, inflation will slow down to 9-10 percent by the end of 2021.
“The restraining influence on the inflation rate until the end of the year will be exerted by the persistence of relatively tight monetary conditions from the 4Q2020, the gradual exhaustion of the influence of quarantine measures and the effect of the high base formed as a result of the increased price growth in March-April 2020, as well as the fading pass-through effect on prices of a sharp devaluation of the soum exchange rate in April 2020,” CBU reports.
At the same time, it was noted that there are still risks associated with the possibility of one-off inflationary factors, as well as a more rapid recovery in demand in the context of a relatively limited supply of goods and services, the introduction of quotas and duties on the export of certain types of food by countries exporters of basic food products.
In addition, the CBU noted there is a likelihood of the transfer of increases in fuel and transportation costs to commodity prices, as well as the pro-inflationary impact of higher excise taxes on certain types of goods and seasonal increases in food prices, between the depletion of stocks and the arrival of a new crop on the markets.
“In the coming months, significant growth is expected in the construction sector compared to last year, which may serve as a factor in the growth of prices for cement and other building materials,” the CBU added.
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