The twelve month consumer price index went down to 9.1 percent by June. The improvement was mainly determined by the exceptionally small price increase of foodstuff and household energy, but the gradually smaller pace of devaluation also played a role in it. On the expenditure side wages play a key role in the increased price level. At the same time the roles played by budget deficit and its financing are also essential, as the interest raising effect of government bonds cannot be neglected. Industrial production price index sunk below consumer price index and they have been moving together since.
Inflation continues to decrease this year, though the its pace may slow down in the second half of the year. International energy prices definitely increased, which will be followed by domestic prices. The current depressed price level of foodstuffs may incapacitate the agricultural sector. The increase of the budget deficit coupled with higher wage rates following the wage negotiations can generate inflationary pressures, while consumer demand could increase further. Taken everything together the 12 month consumer price index for 1999 is expected to turn out between 9.5 and 10 percent, while the December rate will be somewhat above 10 percent.
Apart from the drop in the beginning of 1999, probably explicable by the low level of average net income, over the last two years retail turnover showed a slow increase. By the end of this year approximately 4 percent increase can be expected. This favorable trend is a result of the increasing incomes and salaries with a consumer price level increase, which has been milder than during the previous years. Deep rooted structural changes may also contribute to the process: sales volumes are gradually shifted from stores to shopping centers, which clearly offer better conditions, selection and prices. –
