The increased price of meat and fuel affected Ulaanbaatar inflation, accounting for 45 percent of inflation or four units of three kinds of products. As mentioned in the new inflation status report in June, several factors have hit the reduction of vision. For example, consumer loan lending has slowed down and the decrease in loan balance from the beginning of the year reduces the depreciation burden and increases the impact of wage growth-inflation.

Also, public investment expenditures have been delayed and the appreciation of the MNT has risen against the CNY. The increase in budget expenditures and its implications will further increase inflation in 2020. However, the effects of supply factors will slow and overall inflation is expected to be around the target level over the anticipated period.

If the budget outlook exceeds the expectation of the election year, there is a risk of inflationary pressures on demand. In addition, the trade war might trigger commodity prices to fall, boosting the burden of MNT, and increasing the price of imported goods, reported the BoM.