Inflation is set to slide further

Inflation posted a fresh decline in February, with sources from the National Statistics Service suggesting it has dropped to between 1.6 and 1.7 percent. The official data will be announced on Monday, but it appears that the consumer price index has dropped further from last month’s 1.8 percent rate, the lowest in 40 years. This allows the government to go ahead with pay rises of just 2 percent. Inflation has slowed due to a significant drop in international oil prices and the stabilization of prices of other commodities. In the first few months of 2008, prices of goods and services were rising at a fast pace, so the comparison is now even more pronounced. Although average inflation ended at 4.2 percent last year, it appears set for a significant reduction in 2009, with the Economy Ministry forecasting a rate of 2.6 percent. Current estimates put inflation for the first eight months of the current year at below 2 percent.