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.
Author: Ricardo Aceves, Senior Economist