In March 2012, the consumer price index (hereinafter - the CPI) increased only by 0.3%, whereas twelve-month CPI inflation fell to 1.9% (the lowest figure recorded in the last 9 years). For the seventh month in a row, the seasonally adjusted CPI has remained negative (‑0.2% in March).

The core CPI continued to decelerate to 5.3% year on year (the core CPI rose by 0.1% on a month-on-month basis). It was achieved due to the moderate monetary and fiscal policies, which continue to put downward pressure on the aggregate demand (the annual growth rate of monetary aggregates continued to slow down, the consolidated and state budgets for January-February showed a surplus).

The growth of prices for deeply processed foodstuffs, which are included in the core CPI, have declined to 8.6% over the year, which was driven by secondary effects arising from a drop in prices for raw foods. The narrow core inflation has declined to 1.4% year on year.

In March 2012, inflation was determined by its non-core component, which stood at 0.4% (contribution to the change in the CPI made up 0.2 p. p.), whereas the annual non-core CPI inflation continued to follow a downward trend, having declined to -2.7%. A key factor behind a decrease in the annual non-core CPI inflation was the ongoing decline in prices for raw foods, which stood at 7.2% over the last twelve months, on account of last year’s bumper crop.  

Rises for administratively-regulated prices slowed down to 3.9% year on year (0.5% in March), contributing 0.7 p. p. to the change in the CPI (0.1 p.p. over a month).

Fuel prices grew at a faster pace (by 11.6%) than other components of the non-core inflation over the last twelve months, which was driven by oil price rises in the international commodity markets.

The producer price index growth (hereinafter - the PPI) decelerated to 6.5% year on year in the context of declining external demand, which would put downward pressure on prices for products of basic export-oriented industries. March saw a 1.1% increase in the PPI, which was driven by a 0.9% rise in prices for processing industry products, contributing 0.6 p. p. to the change in the PPI (3.0 p.p. over the year).