Russia: Inflation remains stable but elevated in August
Latest reading: Inflation came in at 9.1% in August, matching July’s figure. August’s figure represented the joint-highest inflation rate since February 2023 and surprised markets slightly on the upside. Looking at the details of the release, faster price pressures for services largely offset a slower increase in prices for non-food goods. As a result, overall price growth remained entrenched above the 4.0% target of the Central Bank of the Russian Federation (CBR) in August. That said, core inflation edged down to 8.4% in August from the previous month’s 8.6%.
Meanwhile, the trend pointed up, with annual average inflation coming in at 7.8% in August (July: 7.5%).
Lastly, consumer prices rose 0.20% in August over the previous month, a much smaller increase than July’s 1.14% rise and marking the weakest reading since October 2022.
Outlook: Our panelists expect inflation to ease from Q4 onwards. Robust domestic demand growth and labor shortages will continue to fuel price pressures, but they will be mitigated by the delayed effect of ongoing monetary policy tightening, as well as a more favorable base of comparison. Inflation is expected to average above 2023’s rate in 2024 as a whole and outpace the CBR’s target until 2028.