Russia Inflation June 2016


Russia: Inflation rises slightly in June after being stable for three months

July 5, 2016

Consumer prices increased 0.4% in June over the previous month, which was in line with the reading registered in May and came in above the 0.3% rise the markets had expected. According to the statistical office, the monthly increase was the result of higher prices for goods, in particular processed food and non-food items, as well as for services, particularly prices related to healthcare services.

Inflation began to notably decline toward the end of 2015 and stabilized at 7.3% between March and May. After this stable period, inflation inched up to 7.5% in June, which reflects that a base effect is fading. Moreover, the recent stabilization of the Russian ruble has helped to diminish inflationary pressures. That said, inflation remains well above the Central Bank’s target of 4.0%.

At its 10 June monetary policy meeting, the Central Bank of Russia announced a 50-basis point cut to 10.50%. In making their decision. In making the decision to cut interest rates, the Central Bank indicated that authorities are more confident about the evolution of inflation and noted the positive results of a drop in inflation expectations and decreased inflation risks against a backdrop of a slow recovery of the economy.

The Central Bank recently expects that inflation will end this year at between 5.0% and 6.0%. Russian monetary authorities are confident that inflation will be on track to reach the 4.0% target at the end of 2017. The Consensus view of a panel of analysts surveyed by FocusEconomics is not in line with the Central Bank’s assessment. Panelists see inflation ending 2016 at 7.0%, which is down 0.5 percentage points from last month’s forecast. For 2017, participants expect inflation to ease to 5.6%.

Author:, Senior Economist

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Russia Inflation Chart

Russia Inflation June 2016 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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