Mongolian consumer price inflation was 7.3% y/y in January, according to latest national statistics office data. In monthly terms, inflation grew slightly by 0.6% in the first month.
Inflation continues to be pushed up by accelerating growth, which registered at 6.9% in 2018 up from 5.1% in 2017. Rising growth was partly supported by growing commodities prices and rising demand for Mongolian coal in China, which was forced to replace North Korean coal shipments barred by sanctions in the wake of Pyongyang’s nuclear weapons tests.
“Both the strong growth and the authorities’ commitment to discipline on public spending have resulted in large over-performance on fiscal targets under the [bailout] program.” The International Monetary Fund said during its visit to Mongolia last month.
“To tackle signs of overheating pressures that are a headwind on further international reserve accumulation, the Bank of Mongolia has raised the policy interest rate and introduced macro-prudential measures to rein in excessive credit growth,” it added.