Emerging Europe was one of the few parts of the world where inflation rose last month. In the Czech Republic, Hungary and Romania, this was driven by rapid wage growth which has pushed core inflation up to multi-year highs. As a result, despite the worsening external environment, the path for interest rates in the coming months is still likely to be up. In contrast, the rise in Russian inflation seems to be a result of the VAT hike earlier this year; underlying inflation is still soft. The next move in interest rates there is likely to be down, albeit not until 2020.
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