Inflation was 5.7% y/y and -0.5% m/m in July 2020
Annual CPI inflation retreated to 5.7% in July 2020 from 6.1% in previous month, according to Geostat. Core inflation (non-food, non-energy) was 6.1% in July 2020, while core inflation excluding tobacco was 5.8%. Annual price changes were driven by price increases in food and non-alcoholic beverages (+11.5% y/y, +3.55ppts) and alcoholic beverages and tobacco (+9.0% y/y, +0.61ppts) categories and price drop in transport (-9.3% y/y, -1.18ppts) category. On a monthly basis, there was 0.5% deflation in July 2020, affected by price decreases in food and non-alcoholic beverages and clothing and footwear categories.
International reserves up 4.5% y/y and up 6.2% m/m in July 2020
Gross international reserves increased by 4.5% y/y to US$ 3.8bn in July 2020 according to NBG. The reserves were also up by 6.2% (+US$ 224mn) on a monthly basis. Growth in reserves was attributed to the disbursement of donor funding to the budget, fully compensating FX sales totaling US$ 60mn by NBG in July 2020.
NBG cuts its policy rate by 0.25ppts to 8.00%
At its meeting on 5 August 2020, NBG’s monetary policy committee decided to reduce its policy rate by 25bps to 8.00%. According to NBG, inflation decline in July was expected and it forecasts inflation to continue declining over the rest of the year, and fall below the target level in 1H21. The National Bank also stated that it revised forecast and expects economy to shrink by 5% in 2020, exerting downward pressure on inflation. The NBG reiterated to “use all instruments at its disposal to ensure price stability.” The next committee meeting is scheduled for 16 September 2020.
