Russia Inflation August 2022

Russia: Inflation falls to lowest level since February in August

Inflation came in at 14.3% in August, down from July’s 15.1%. August’s figure marked the weakest inflation rate since February. The moderation was broad-based. Prices for services, food products and non-food goods all rose at a softer pace in August compared to the previous month.

That said, annual average inflation rose to 12.3% in August (July: 11.7%). Meanwhile, core inflation fell to 17.7% in August, from the previous month’s 18.4%.

Finally, consumer prices fell 0.52% from the previous month in August, a sharper drop than the 0.39% drop logged in July. August’s result marked the weakest reading since August 2017.

Commenting on the inflationary backdrop and outlook, analysts at Goldman Sachs said:

“Inflation in Russia had been falling as prices normalized after overshooting initially due to the sharp depreciation of the Ruble post the invasion. […] Going forward, the disinflationary impact from Ruble’s strong rebound since then should fade […] We think underlying inflation in Russia remains high with above +10.0% yoy services inflation and in general a rising core momentum. Considering strong domestic demand fueled by loose fiscal policy with the abandonment of the fiscal rule and a recent pick up in loan growth, we think it will take longer to bring inflation back to CBR’s +4.0% target.”

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