Macro and Politics

* The CBT released the results of the February Sectoral Inflation Expectations (SIE) survey. In addition, the results of the newly introduced Household Expectations Survey (HES), designed to measure households’ expectations regarding inflation, the exchange rate, housing prices, and investment tendencies, were published for the first time as of yesterday. As of this month, household 12-month-ahead consumer inflation expectations within the SIE framework will be derived from the HES, replacing the previously used Consumer Tendency Survey data. Accordingly, in February, 12-month-ahead annual inflation expectations declined by 0.1 points to 22.1% for market participants and by 0.9 points to 32% for the real sector compared to the previous month. Household inflation expectations, however, remained unchanged at 48.81%. A closer look at the distribution reveals a further deterioration in household sentiment. The share of households expecting inflation to decline over the next 12 months fell by 4.63 points to 20.33%, while the proportion expecting inflation to increase rose by 4 points to 63.35%. While the overall trajectory has been broadly downward since the beginning of 2024, the pronounced divergence across segments remains intact. The current configuration suggests that economic agents continue to display a backward-looking and adaptive expectations formation process, reacting sensitively to recent inflation realizations. We expect the gradual easing trend in sectoral expectations to persist in the period ahead.