The Bank of Russia announced signs of increased inflationary pressure

A number of price indicators and increased inflationary expectations of the population indicate an increase in inflationary pressure on the economy, should from the Bulletin “What Trends Say” prepared by the Research and Forecasting Department of the Bank of Russia.

“The combination of indicators indicates that sustainable inflationary pressures are now at or above the inflation target of the Bank of Russia. At the same time, risks in the medium term are shifted towards pro-inflationary ones,” the Central Bank’s bulletin says.

Analysts say that, seasonally adjusted, the pace of consumer price growth will increase in the coming months. The reason for this is the exhaustion of the pass-through effect from the strengthening of the ruble and the increase in consumer demand as a result of easing credit conditions and a decrease in the propensity to save. The document says that annual inflation is slowing down while maintaining close to zero rates of price growth.

As signs of an increase in inflationary pressure, analysts identified a decrease in prices under the influence of one-off factors, prices for certain parts of the consumer basket – in particular, for market services, an acceleration in the growth of the money supply to a maximum level since 2012 with an increase in the budget impulse with a limited supply, etc.

“Weekly price statistics indicate a gradual increase in inflationary pressure in August. The decline in the general price level continued, however, compared to July, the number of goods and services, the prices of which are growing at a rate of more than 4% per annum, has increased, and the number of items, the prices of which are declining, has decreased,” the document says.

Earlier at the plenary session of the Eastern Economic Forum (WEF) Russian President Vladimir Putin declaredthat inflation in the country is steadily declining: at the end of the year, the indicator is expected to be at the level of 12%, in the first or second quarter of 2023 – at the level of 5-6%, possibly even 4%. In July, the Bank of Russia also gave optimistic inflation forecasts. According to the regulator, this year it will be 12-15%, and next year it will drop to 5-7%. Inflation will return to 4% in 2024. Back in June, the Central Bank spoke about price growth at the level of 14-17% in 2022.