Central Bank warns of further acceleration of inflation

According to the forecast of the Bank of Russia, annual inflation will continue to rise in the coming months. In 2023 it will be 5-6.5%, will return to 4% in 2024 and will be close to 4% in the future, says in the materials of the regulator.

The next acceleration of inflation will be associated with an increase in price pressure, as well as the withdrawal from the calculation of low monthly growth rates in the summer of 2022.

In July, the rate made up 4.3%. “The acceleration of annual price growth for the main groups of goods and services was associated both with an increase in the current price growth rate, including due to the ruble depreciation pass-through to prices, and with the continuing effect of a low calculation base. The growth in prices for services has slowed down due to the absence of the annual July indexation of utility tariffs,” the Central Bank’s review notes.

According to the regulator, consumer prices rose by 0.63% over the month. On average, over the past three months, consumer prices have grown at a rate of 0.61%, which corresponds to 7.6% in annual terms. This is comparable to the price dynamics of the second half of 2021. Fruits and vegetables, oil products, as well as goods and services with a high share of import costs, such as foreign tourism services, equipment and electronics, and cars, have risen most noticeably.

On August 15, an extraordinary meeting of the Board of Directors of the Bank of Russia will be held on the issue of the key rate. Against the background of the weakening of the ruble on August 14 in the Central Bank admitted raising the key rate in the future in order to tighten monetary policy and return inflation to the target of 4% in 2024. The regulator ruled out a threat to Russia’s financial stability due to the depreciation of the ruble.