Russia Inflation

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Russia: Inflation hits highest level in more than three years

November 5, 2014

In October, consumer prices added 0.8% over the previous month, which was above the 0.7% rise observed in September, but fell short of the 0.9% rise the markets had expected. October’s result continued to reflect rising food prices, especially for fresh food because the local harvest has ended and the impact of the imports’ ban that the Russian government has imposed in early August in retaliation to the sanctions imposed to the country over the crisis in Ukraine has been stronger than expected.

As a result of the monthly increase, annual inflation rose from 8.0% in September to 8.3% in October, which marked a level not seen since July 2011. At the current rate, inflation remains above the Russian Central Bank’s 1.5% upper ceiling of its 5.0% inflation target. Monetary authorities had recognized that inflation is unlikely to move toward the Bank’s 5.0% target before the end of the year.

Core consumer prices, which exclude short-term price changes that are influenced by administrative and seasonal factors, added 0.8% in October, which was slightly down from the 0.9% increase tallied in September. Annual core inflation increased from 8.2% in September to 8.4% in October, which is the highest level since July 2011.

Russia is likely to continue experiencing ballooning inflation going forward as a result of the ban in imports of meat, poultry, dairy products, vegetables, fruits and other products from some Western countries. In addition, the Central Bank’s recent decision to reduce foreign exchange interventions in order to further increase currency flexibility will have an impact on inflation going forward.

The Ministry of Economic Development expects inflation to end this year at 7.2%. The projection was revised up from its previous 6.0% estimate. For 2015, the Ministry sees inflation easing to 6.5%, which was also revised from its previous 5.0% projection. FocusEconomics Consensus Forecast panelists see inflation ending 2014 at 6.5%, which is unchanged from last month’s forecast. For 2015, participants expect inflation to ease to 5.2%.


Author:, Senior Economist

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Russia Inflation Chart


Russia Inflation October 2014 0

Note: Year-on-year and month-on-month variation of consumer price index in %.
Source: Federal State Statistics Service (Rosstat).


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