Russia Inflation December 2023

Russia: Inflation falls in December

Inflation dropped to 7.4% in December, easing slightly from November’s 7.5% reading. The softening came on the back of easing services inflation, which more than offset a faster increase for prices of food and non-food goods.

Annual average inflation fell to 5.9% in December (November: 6.2%). Meanwhile, core inflation rose to 6.8% in December, from November’s 6.4%.

Finally, consumer prices rose 0.73% over the previous month in December, which was below November’s 1.11% increase. December’s result marked the weakest reading since August.

Our panelists expect price pressures to easy gradually over the course of 2024. That said, inflation appears rather sticky, with risks skewed significantly to the upside. Commenting on the inflationary backdrop, UniCredit’s Artem Arkhipov said:

“Inflation seems to be rooted in demand growth outpacing supply, of which there are abundant signs: labor-market shortages, strong import demand, delayed consumption, strong demand for borrowing”

Meanwhile, on the inflationary backdrop, Artem Arkhipov noted:

“The CBR is aware of […] inflationary risks, and while further hikes do not seem likely, the monetary authorities can keep the key rate high for a prolonged period. We do not expect the CBR to turn to policy easing before June 2024, and the average key rate for 2024 is expected to exceed 12.00%. Tight policy will help calm prices at the end of 2024, when we expect headline inflation to amount to 4.0-4.5%.”

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