In July, consumer prices increased 0.23%, which was well above market expectations of no price variation and below the 0.43% increase observed in June. Housing costs experienced a notable upward shift and thus accounted for the lion share of the July price increase, which was mitigated only by lower prices for clothes. As a result of the July price increase, annual headline inflation rose from 1.1% in June to 1.4% in July. Moreover, the core inflation index, which excludes volatile categories such as oil and fresh fruits and vegetables, increased 0.40%, which took the annual rate from 0.6% in June to 1.0% in July. Prices thus are developing according to the Central Bank’s expectations, which had anticipated inflation returning to normal from a temporary deflationary period in the March/April period this year. In its last policy report from May 2004, the Central Bank confirmed that inflation should reach the central target of 3.0% within the usual policy horizon of 24 months. In order to achieve this objective the Central Bank is likely to maintain its accommodative monetary policy stance and should abstain from raising the benchmark policy rate - currently at 1.75% - in the near future despite the resilient economic growth figures. Consensus Forecast panellists share the inflation assessment of the Central Bank and again raised their year-end inflation forecast from 2.1% last month to 2.3%. By the end of 2005, inflation will reach 2.8%, according to the Consensus.