Following a peak of 10.1% in February of this year, inflation has gradually decelerated, reaching 4.3% in October. BAM notes that the year is anticipated to conclude with an average inflation rate of 6.1%, compared to 6.6% in 2022. This information was shared in a statement released after the latest quarterly meeting of BAM's Council for the year 2023.

Taking into account the anticipated dissipation of external inflationary pressures, the direct effects of fiscal measures from the 2024 budget law, and the gradual process of compensation outlined in the three-year budget program for 2024-2026, along with the assumption of nearly stable prices for volatile food products, inflation is projected to see a significant decline, settling around 2.4% in both 2024 and 2025, the same source adds.

The underlying component of inflation is expected to follow a similar trajectory, decreasing from 6.6% in 2022 to 5.6% in 2023, further attenuating to 2.4% in 2024 and 2.3% in 2025.

The Council also noted that medium-term inflation expectations, as reflected in BAM's quarterly survey, continued to decrease in the fourth quarter of 2023. Furthermore, the cumulative impact of BAM's three recent decisions to raise the key interest rate on monetary conditions and the real economy is ongoing.