Inflation Review. Q3-2022

In Belarus, inflationary pressures eased in Q3-2022, but risks of persistent runaway inflation are high.

In Q3-2022, inflation was 9.2% QoQ (annualized, seasonally adjusted), which was 1.7 times less than in Q2. Annual price growth slowed down to 17.4% (YoY) in September. The weakening of domestic demand and adjusting strengthening of the Belarusian ruble against the foreign currency basket since its peak in early July reduced inflationary pressure in the economy. Higher yield of agricultural crops had a disinflationary impact in Q3. Despite the inflation slowdown, its rates remained elevated due to the disruption of production, logistics and financial chains, and due to the persistent undervaluation of the Belarusian ruble against the Russian ruble. Tighter price regulation can lead to a temporary slowdown in annual inflation to 14–16% (YoY) by the end of 2022. At the same time, there are higher risks of a shrinking product range, deterioration in the properties of goods and services, and accelerated price growth once the regulation eases. Given the probable continuation of loose monetary policy next year, inflation may remain elevated in 2023