Central Bank warns of further acceleration of inflation in the coming months

Annual inflation in Russia will continue to accelerate in the coming months on the back of last year’s low base, says in the commentary of the Central Bank “Dynamics of consumer prices”.

“In May-September 2023, the calculation of annual inflation results in very low values ​​of price increases of the previous year, when there was a correction after the jump in prices in the spring of 2022. As a result, an increase in the annual inflation rate will continue in the coming months,” the Central Bank said in its materials. .

At the same time, an increase in the current rate of price growth will also have an additional impact, the regulator notes.

In June, consumer prices accelerated growth to 0.37% after 0.31% in May, the Central Bank indicates, seasonally adjusted, the increase was 0.52% after 0.39% a month earlier, which corresponds to 6.4% in annual terms. In the II quarter, seasonally adjusted, the average monthly increase in prices amounted to 0.41% after 0.34% in January-March.

The Central Bank also noted that the weakening of the ruble so far had a less noticeable effect on prices than usual. The exception was tourism services and cars.

“Nevertheless, as demand further intensifies and stocks of goods are depleted, the accumulated effect of the ruble weakening may be transferred to prices to a greater extent,” the regulator warns.

In June 2023 annual inflation accelerated to 3.25% from 2.51% in May, Rosstat reported earlier.

According to the forecast of the Ministry of Economic Development, inflation at the end of 2023 will drop to 5.3%. The Board of Directors of the Central Bank at a meeting on June 9 for the sixth time in a row since September 2022 left the key rate at 7.5% per annum. According to the regulator’s forecast, in the second quarter inflation will be at the level of 3.6%, and by the end of the year it may reach 4.5-6.5%. In 2024, inflation will reach a plateau. The target of the Central Bank for inflation is 4%. The next key rate meeting will take place on July 21.

On July 13, the Central Bank published the results of the latest macroeconomic survey: analysts almost doubled (from 0.8% to 1.5%) raised forecast for Russia’s GDP growth, having also raised the forecast for inflation (from 5.5% to 5.7%).