OREANDA-NEWS. September 15, 2011. The basic annual inflation rate was 4.1%, up 0.1 percentage points from the previous month, according to the National Bank’s press release. The monthly inflation rate in August this year reduced by 0.1 percent mostly as a result of the decrease in food prices by 0.8 percent, while nonfoods became 0.4 percent more expensive and fees for services provided to the population increased by 0.2 percent.

The monthly inflation dynamics in August 2011 was mostly determined by the effect of the second wave from the rise in fuel prices and in fees for public utilities, as well as from reduction in supply of some goods on the home market as a result of the less favorable weather conditions for some farming products. At the same time, population’s demand for some products and services increased, so did the external demand for domestic production. The pro-inflationary impact of the factors mentioned above was partially compensated by the tendency of strengthening of the nominal effective exchange rate of the national currency during a year.

The annual basic inflation rate increased for the last 12 months by 4.1 percent (0.1 percentage points more than in the previous month). In August 2011, the basic inflation growth was lower than in the previous month, amounting to 0.1 percent. The dynamics of the indicator was mostly determined by the growth of prices for cigarettes and cigars as a result of the rise in excise taxes on tobacco products in April, and for building materials as a result of the revival of the building sector. Food prices, that reduced by 0.8 percent, were the main disinflation factor in August.

At the same time, this seasonal price reduction was moderated by the growth of prices for meat, meat products and canned meat – by 1.1 percent, fish and canned fish – by 1%, milk and dairy products – by 0.8%, alcoholic drinks - 0.5%. Fuel prices rose by 2.3 percent, mainly due to the rise in liquefied gas price by 10.3% as a result of its deficit on the domestic market because of the temporary closure of the plants-producers.

After the considerable growth in the first half of this year, regulated prices reduced by 0.3% in August. The NBM forecasts further growth of fees for natural gas, heating, electricity and hot water for the next period, as a result of the growth of the purchasing price for imported natural gas. This dynamics will be moderated by the good harvest.