Persistent rise in annual inflation observed in Belarus
In the latest monthly inflation report, prices for food, non-food products, and services have all seen an increase, with food prices experiencing the most significant year-on-year growth.
The consumer price index for the current month stands at 100.2%, representing a 10.6% increase in food prices over the year. This is higher than the annual inflation rate for non-food products (3%) and service prices (7.6%).
By the end of June, annual food inflation was 10.5%, a slight decrease from the current year's rate. In contrast, service prices rose by 0.7% over the month, and non-food product inflation was 3.2% in June.
The primary factors contributing to the increase in annual inflation rates for food, non-food products, and services include higher import taxes and tariffs, rising shelter costs, food prices, labor costs, the end of core goods deflation, and supply chain disruptions and consumer demand dynamics.
Tariffs have led to increased prices as firms, after initially stockpiling to avoid higher tariffs, now face higher costs they pass to consumers. Shelter costs have become the largest contributor to overall inflation, accounting for about 48 percent of the increase. Food prices are driven by factors such as changes in trade patterns, plant and animal diseases, adverse weather affecting crops, labor market tightness, and energy prices.
Labor costs, particularly in the services sector, where wages and compensation form the majority of input costs, are another significant contributor to inflation. A structurally tight labor market keeps wages elevated, sustaining inflation in core services even during economic slowdowns.
The end of core goods deflation, as prices of goods normalize post-pandemic, combined with a weakening U.S. dollar that raises import prices, leads to renewed upward pressure after a period of declining core goods prices. Supply chain disruptions and consumer demand dynamics, including pent-up demand and ongoing economic adjustments post-pandemic, continue to influence pricing pressures across different sectors.
Looking forward, compared to December 2024, the consumer price index is projected to reach 105.6%. As the economy continues to recover and adjust, it is essential to monitor these trends and understand the underlying drivers of inflation to make informed decisions.
- The ongoing trade disputes, a tight labor market, and persistent supply chain disruptions in the finance and business sectors are influencing inflation rates, particularly in food, non-food products, and services, often due to increased costs that firms pass to consumers.
- The annual inflation rates for food, non-food products, and services are affected by various factors, such as higher import taxes and tariffs, shelter costs, labor costs, changes in trade patterns, and consumer demand dynamics, which are often reflected in the general news and politics.
