Inflationary pressures retreat

Although one-off factors such as the e.coli outbreak may be behind the sharp drop in prices of seasonal fruit and vegetables in June, today’s CPI data reveal few inflationary pressures in the region. This supports our view that interest rate rises will remain on hold for the remainder of this year at least, with the possible exception of Romania, where there is an increasing risk of a defensive rate increase owing to concerns over the falling value of the leu.