Inflation forecasts

The inflation projection is based on an economic model that follows a time series analysis - the autoregressive estimation approach. The inflation projection is presented in the form of a fan chart with the central projection and bands around it. The inflation fan chart is a graphical representation of the distribution of probabilities of inflation rate projections, expressed through the consumer price index. Instead of determining specific points, the chart`s distribution of probabilities takes into account potential risks and uncertainties that exist in the real economic flows which could affect the inflation rate in the coming period (rising energy prices, increasing/reducing foreign trade deficit, etc.).

In addition to the model projection, the Central Bank prepares an expert inflation projection four times a year. This projection is based on the results of the inflation expectations survey, estimates of aggregate demand and inflationary pressures from the international environment.

Both model and expert inflation projections as well as the assumptions on which they are based are published in Inflation Report/Price Stability Report and the CBCG Annual Report.