Central Bank Sees Annual Inflation Declining In Early Months of 2020

It sees inflation resuming a slightly upward movement in the latter part of this year.

The central bank's board on Friday examined and approved the February 2020 Inflation Report, which incorporates the most recent data and information available. The new forecast broadly reconfirms the coordinates of the previous medium-term projection.

The annual CPI inflation rate went up in December 2019 to 4% from 3.8% in November, i.e. above the variation band of the flat target and slightly higher than the forecast. The rise versus end of the third quarter, when it dropped to 3.5%, owes mainly to the faster dynamics of fuel prices, amid a base effect, but also to the notable hike in fruit prices, as well as to the acceleration in core inflation.

Heightened uncertainties and risks surrounding the inflation outlook stem from the future fiscal and income policy stance, especially given the 2020 election calendar, while the level and trend of the current account deficit and of the fiscal deficit are particularly concerning, the central bank noted.

Rising uncertainties are also generated by the low dynamics of the euro area and global economies, as well as by the growing risks to their outlook, amid the coronavirus outbreak. Further relevant are also the ECB’s and the Fed’s monetary policy decisions, as well as the stance of central banks in the region.

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