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“The supply bottlenecks for intermediate products … have a dampening effect, however they do not impair the positive underlying dynamic of the overall economy,” the ministry said in its monthly report.

The ministry said it expects inflation to reach 3% or more in the second half of 2021 due to a base effect from a temporary VAT cut last year that was part of the government’s stimulus program to help the economy recover from the coronavirus shock.

Inflation will ease significantly in 2022, it added.