In March, the inflation rate in the Russian Federation slowed to 0.39%

According to the Central Bank’s report published yesterday, in March the inflation rate in the Russian Federation slowed down noticeably – to 0.39% versus 0.68% in February. In annual terms, inflation increased to 7.72% after February’s 7.69%. However, guided by the goal of reducing inflation to the target level of 4%, the regulator focuses primarily on monthly price changes with seasonal adjustments in annual terms (a.y.). In March, this figure slowed to 4.5% versus 6.3% in February, which turned out to be close to the Central Bank’s inflation target of 4% and was the minimum increase since April 2023 (see chart).

On average, for the first quarter of 2024, consumer prices grew at a rate of 5.7% (s.o.y.) and the current growth rates are noticeably lower than those observed in the second half of 2023, which indicates a sustainable slowdown in price growth since December, the authors note report. “However, further decline in CPI (consumer inflation.— “Kommersant”) happens slowly,” they note. The fact is that the current decline was mainly due to changes in prices for volatile components. The rise in price of the stable component also slowed down, but less significantly (core inflation remains above 6% sq.y.).

Despite the slowdown compared to the autumn months, the rate of price growth remains high for a wide range of goods and services. “The main pro-inflationary factor is high domestic demand, which continues to outstrip the possibilities for expanding supply,” the Central Bank again states. Thus, in services (excluding housing and communal services) the growth rate is still double-digit – 13% p.m. k.g. “In recent months, sharp price fluctuations were typical only for tourism-related services, while in the fall there were more such goods and services. This indicates a decrease in the number of local price spikes,” the Central Bank notes.

According to analysts of the Telegram channel “Hard Figures”, in the first week of April the inflation rate accelerated to 7% from 2015. k.g. “One weekly point does not allow us to judge the full picture, but together with the dynamics of stable components of inflation, it should give reason to think about the instability of the slowdown,” analysts note. The Central Bank continues to say that to reduce inflation it is necessary to maintain tight monetary conditions “for a long time.”

Artem Chugunov