Annual inflation in Russia accelerated to 5.33%

Annual inflation in Russia in the week from September 5 to 11 accelerated to 5.33% after 5.19% last week, the Ministry of Economic Development reported in its weekly review. Rosstat estimated the price increase in weekly terms at 0.13% after 0.11% a week earlier.

In the food segment, prices increased by an average of 0.13%. As follows from Rosstat data, during this period, chicken eggs rose in price by 1.3%, chicken meat by 1.2%, and rice by 0.7%. Fruit and vegetable products fell in price during this period by an average of 0.9%. The largest decreases were shown in prices for cabbage (-6.8%), carrots (-4.9%), onions and potatoes (-3.5%) and beets (3.3%).

The rise in prices for non-food products slowed to an average of 0.21% after 0.41% in the previous week. Thus, electrical and household appliances fell in price by 0.02% after rising in price by 0.19%. The growth in prices for passenger cars slowed to 0.23% after 0.75%, and for construction materials – to 0.17% after 0.23%. At the same time, gasoline prices continued to rise, increasing to 0.7%, diesel prices rose by 1.7%.

In the tourism and consumer services segment, inflation averaged 0.13% after deflation of 0.28% a week earlier. Air tickets for domestic flights rose by 2.52% after falling by almost 5% a week earlier. Household services prices rose 0.07% from 0.2% the previous week, thanks to slower increases in prices for hairdressing services and car washing.

In August, annual inflation in Russia accelerated to 5.15% after 4.3% in July and 3.25% in June, Rosstat previously reported. In monthly terms, prices rose by 0.28% compared to 0.63% a month earlier.

According to the Central Bank’s forecast, annual inflation will continue to rise in the coming months against the background of increasing price pressure, as well as the departure from the calculation of low monthly growth rates in the summer of 2022. The Central Bank expects that inflation by the end of 2023 will be at the level of 5–6.5% per annum and will return to the target at the end of 2024. On September 12, Vedomosti wrote that the Ministry of Energy raised inflation forecast in 2023 in Russia from 5.3% in the April version to 7.5%. For 2024, the forecast changed from 4% to 4.5%. Indicators for 2025 and 2026 remained the same – at the level of 4%.

On August 15, the Bank of Russia raised the key rate by 3.5 percentage points to 12%. The reason was increased inflationary pressure and inflationary expectations, which are pressured by exchange rate dynamics. 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.

Experts surveyed by Vedomosti were unable to reach a consensus on the Central Bank’s decision on the rate: 10 out of 19 respondents consider maintaining the key rate at the current level of 12% as the base scenario, despite the Central Bank’s recent statement about the possibility of increasing it. Other experts believe that the rate will still be increased.