Annual inflation in Russia accelerated to 5.19%

Annual inflation in Russia in the week from August 29 to September 4 accelerated to 5.19% after 5.03% a week earlier, according to the Ministry of Economic Development. On a weekly basis, price growth accelerated to 0.11% after 0.03% in the week of August 22-28.

In the food segment, prices rose by 0.12% after rising by 0.06% a week earlier. In particular, the reduction in prices for fruits and vegetables slowed down (to minus 1.3% after minus 2.7%). Thus, the decline in prices for cabbage slowed down to minus 11.15% after minus 13.74%.

The cost of other food products rose by an average of 0.24% after 0.21%. The Ministry of Economics noted that eggs, bakery products and oil and fat products continue to rise in price. At the same time, sugar, flour, pasta, cereals and meat are getting cheaper. At the same time, prices for chicken meat rose by 1.53% after rising by 1.46% a week earlier. The growth in the cost of other types of meat slowed down compared to last week. The increase in prices for dairy products amounted to 0.03%.

In the group of non-food products, inflation accelerated to 0.41% after 0.18% last week. In particular, cars increased in price by 0.75% (after an increase of 0.11%), electrical and household appliances – by 0.19% (after minus 0.11%), and medical goods – by 0.43 % (after 0.38%).

In the services segment, deflation persists, but at a slower pace: prices fell by 0.28% after falling by 0.37% a week earlier. Travel services fell by 3.09% after falling prices by 3.74% a week earlier due to a slowdown in the rate of price reduction (minus 4.94% after minus 8.77%) of domestic flights. At the same time, the services of sanatoriums are becoming cheaper (by 3.04% after minus 0.46%) and hotels (by 0.09% after an increase of 0.17%). The cost of household services rose to 0.2% after 0.13%.

The Central Bank expects that inflation will be at the level of 5–6.5% per annum by the end of 2023 and will return to the target of 4% at the end of 2024.

August 15 Bank of Russia raised the key rate immediately by 3.5 percentage points to 12%. The reason was the increase in inflationary pressure and inflationary expectations, which are under pressure from the dynamics of the exchange rate. The regulator did not rule out a further increase in the rate in the event of increased pro-inflationary risks. The next scheduled meeting will be held on September 15.