Inflation checked against expectations – Kommersant FM

Russians expect inflation to rise to 14% over the next year. Although the Central Bank assures that it will keep the figure within 4%. The population’s inflation expectations were at their highest since March 2022. The Central Bank shared the results, indicating that back in November the figure was about 12%. At the same time, Russians complain about the lack of savings. The number of those who have at least a small airbag has dropped to 37%.

The head of the regulator, Elvira Nabiullina, called high inflation expectations one of the main risks for the economy. At the same time, the Central Bank has repeatedly insisted that in 2024 it will return inflation to the target of 4%, maximum 4.5%. Why are the population estimates three times larger? Ruben Enikolopov, a professor at the Pompeu Fabra University in Barcelona, ​​answered this question for Kommersant FM: “There is no trust. Everything is simple here: people observe what is really happening with prices and see high inflation.

At the same time, the population is not so irrational, because our budget policy is absolutely pro-inflationary, and the Central Bank is not omnipotent. The population sees all this and does not believe that next year they can return to the target. It is difficult to imagine that inflation, if nothing changes in fiscal policy, will be much lower than in 2023. 7-8% is more realistic.

The economy is overheated, there are not enough workers, there is almost no investment, so GDP growth is achieved through more intensive use of existing resources, and this is always pro-inflationary.

As for the ruble exchange rate, its main characteristic is high volatility. After March 2024, I think it will go down. An extensive range of manual control methods were introduced to control the course. It is clear why this is being done now. They will hold back the ruble until April, and then they will let go of the reins.

Most likely, we will experience one-time fluctuations, without catastrophes and up to the numbers we saw. By the end of 2024, the exchange rate may be more than 100 rubles, because again, the influence of inflation.”

This year, according to President Vladimir Putin, price growth will be within 8%. In 2024, inflation will slow down, although government spending will increase: from the current 29 trillion rubles. up to 36 trillion rubles.

Against this background, the Central Bank has already raised the key rate five times in six months. After Friday’s meeting it stands at 16%. Elvira Nabiullina noted that this should cool demand, which so far exceeds supply.

To return inflation to the target, the regulator had to act more decisively, says Valery Weisberg, director of the analytical department of the investment company Region: “It will be difficult to overcome and reverse the trend, that is, the Central Bank will have to show very serious rigidity – or keep the rate at the current level longer, or even raise it.

I think that on average inflation will be 7%. Although, after the Central Bank slightly raised the rate at the last meeting, the inflationary spiral continues to twist, and the factors that Elvira Nabiullina spoke about at the press conference remain.

And there is very little time left, given that monetary policy operates with a lag of at least several quarters, we should not discount possible shocks, again related to foreign trade and sanctions.

But there are certain hopes that the volume of our foreign trade with China is still quite significant. Chinese exporters are actively reducing prices because there is less and less space for them in the global market. Just as America began to buy fewer goods, the European Union is buying less. That is why the option of importing deflation from China is possible; I would not discount such a “white swan”.”

Elvira Nabiullina said that the regulator is now “close to completing the rate increase cycle.” Previous decisions have so far had only a limited effect: lending is slowing down in some segments, but the overall pace remains high. Next time, in February, the Central Bank promises to make decisions based not only on real price increases, but also based on the expectations of the population and business.

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Ivan Yakunin