Consumer price inflation (chart) accelerated to 5.4% y/y in November from 5.3% in October, reaching the maximum value over the past 12-month period compared to the 3.3% y/y minimum value in May.

The country's central bank reduced the monetary policy rate to 3.6% in May 2024, at the end of a tight monetary policy cycle aimed at fighting headline inflation rates as high as 35% y/y at the end of 2022 amid energy price hikes. The milder policy rates since May 2024 were explicitly aimed at stimulating economic growth, which remained subdued this year.

The natural gas price hike as of December 1 and possibly electricity price hikes later may further stir inflationary pressures and the central bank will have to reconsider its expansionary monetary policy.

The CORE inflation was still relatively high in May 2024 (6.2% y/y) when the monetary policy rate reached the current level of 3.6% and it remained high in November (6.3% y/y) although decreasing from 6.5% y/y in September-October. 

The headline consumer prices accelerated by 2 percentage points from May to November 2024, during the period of low (3.6%) monetary policy rates. 

In November, the monetary authority realised further cuts would be risky and decided to lower the required reserves for local and foreign currency assets as an instrument to generate additional bank lending.

As of November 2024, food prices were rising by 7.5% y/y, accelerating from 7.2% y/y in October and standing as the main inflationary driver. Non-food prices, which include fuel prices, were up 4.8% y/y (down from 5.3% y/y in October) and the fees paid for services (energy included) were up 3.3% y/y (+2.0% y/y in October).