Headline CPI inflation dropped further to 8.9% y/y in July from 9.9% y/y in June and is now at its lowest level since Sept 2016, according to figures published by the statistical office on Thursday evening. In monthly terms prices declined by 0.7%. Food prices are by far the major driver of disinflation as they dropped by 1.9% during the month, bringing the y/y rate down to 7.1%. This mainly reflects a strong seasonal drop in prices of fruits and vegetables, as well as sugar. Other sectors had a very small effect on the total index with some disinflationary pressure coming from clothing and footwear, health services, communication services, restaurants and hotels. Transportation services and fuels had a small upward effect on inflation, a result of the higher oil prices. Utility price inflation fell further to 4.6% y/y in July, as the government has been keeping utility tariffs artificially low ahead of next year’s elections, which has been complicating talks with the IMF.