As forecast, the December consumer price index jumped 4% as a result of the GST increases. Despite this, we think price inflation remains comfortably under control. This is the message that was communicated in the December Monetary Policy Statement and repeated in our January OCR Review this week.
A more prolonged surge in global inflation, especially in central and eastern Europe, could also put pressures on domestic prices in Ukraine. A faster-than-expected monetary response by leading central banks poses the risk of there being capital outflows from emerging markets. The economic repercussions arising from the spread of new coronavirus variants are creating a lot of uncertainty.