Russians’ inflation expectations rose to 11.7% in September

Inflation expectations of the Russian population increased again in September. According to a survey by LLC inFOM, their median estimate for the year ahead was 11.7% compared to 11.5% a month earlier. reported on the Central Bank website.

The growth of inflation expectations for the five years ahead amounted to 1.9%, the figure increased to 11.4%. The annual inflation observed by Russians after four months of decline increased by 0.3 percentage points, returning to the July values.

“Respondents’ concern about rising prices for most goods included in the survey has increased. Respondents, noticeably more often than in August, reported strong increases in prices for gasoline, as well as meat and poultry. The respondents’ concerns about rising prices for these goods reached their highest level in a year,” the Central Bank said in its materials.

The regulator also noted a decrease in the consumer sentiment index to the level of February and an increase in the propensity of respondents to save.

Business price expectations have risen to their highest level since April last year. The growth of the indicator, the Central Bank notes, continued due to the weakening of the ruble and the accelerating increase in price costs. Among the latter, participants in the Central Bank’s price monitoring (about 11,100 enterprises) highlighted the rise in fuel prices and rising wages amid a shortage of employees. The average rate of increase in selling prices that enterprises expect in the next three months was 5.9% year-on-year after 5.2% in August, which is noticeably higher than the inflation target, the regulator notes.

In September, the Bank of Russia predicted that annual inflation would continue to rise in the coming months due to increasing price pressure. In 2023, annual inflation will be 6-7%. It will return to 4% in 2024 and will remain at this level in the future. The Central Bank also clarified that to limit the deviation of inflation from the target and return it to 4% in 2024, an increase in the key rate was required.

On September 15, the Central Bank raised the key rate by 1 percentage point to 13%. This is the third consecutive rate increase in a month and a half: first, the Central Bank raised the rate at a meeting on July 21 by 1 percentage point to 8.5%, and then unscheduledly increased the rate on August 15 immediately to 12%. At a press conference, Central Bank Chairman Elvira Nabiullina noted that the sharp movement of the exchange rate in itself was not a risk to financial stability, but it caused an additional increase in inflation and inflation expectations.