The Central Bank announced the growth of inflation expectations of Russians

Inflationary expectations of the population rose in May after declining in the previous two months and amounted to 10.8%, according to the analytical comments Bank of Russia.

The median assessment of inflationary expectations of Russians for the year ahead increased by 0.4% compared to April, and for five years ahead – by 1.4%, to 11.3%. At the same time, inflation observed by the population in annual terms decreased by 0.8% and amounted to 14.1%.

The consumer sentiment index fell in May after a half-year growth, returning to the level of March this year. Such dynamics is explained by the worsening expectations of Russians regarding the country’s economic prospects and personal financial situation.

“In May, the propensity of respondents to save slightly increased after a strong decline in April, but it remained lower than at the beginning of the year,” the Central Bank said in a statement.

The regulator also notes a decrease in price expectations of enterprises for the next three months. A decrease was recorded in industry, wholesale trade and the service sector, and an increase in retail trade, agriculture, construction, transportation and storage.

The Central Bank recalled that it expects an increase in annual inflation in the Russian Federation from May due to the withdrawal from its calculation of low values ​​​​of an increase in this indicator in the summer-autumn of 2022.

“Taking into account the ongoing monetary policy, annual inflation will be 4.5–6.5% in 2023 and will be close to 4% in 2024 and beyond,” the Central Bank analysts summed up.

Inflation in the Russian Federation slowed to 2.3% in annual terms by the beginning of May, Prime Minister Mikhail Mishustin said earlier. According to the Central Bank, inflation in the country fell to 2.31% in April due to the base effect.

At the end of April, the Bank of Russia improved forecast for inflation and the rate of recovery of the Russian economy in 2023. The regulator now expects GDP growth of 0.5-2%, although back in February it predicted a decline. According to the Central Bank, inflation in 2023 will be 4.5-6.5%, in February it was expected at the level of 5-7%. According to the regulator’s forecast, in the second quarter inflation will be at the level of 3.6%, and by the end of the year it may reach 4.5-6.5%. In 2024, inflation will reach a plateau.