Russia: Inflation edges down but remains elevated in October
Latest reading: Inflation came in at 8.5% in October, down from September’s 8.6%. October’s figure marked the lowest inflation rate since May and was slightly below market expectations. Looking at the details of the release, softer price pressures for services plus food and beverages outweighed a faster increase in costs for non-food goods. That said, overall price growth remained entrenched well above the 4.0% target of the Central Bank of the Russian Federation (CBR).
Annual average inflation rose to 8.2% in October (September: 8.0%). Meanwhile, core inflation edged down to 8.2% in October from September’s 8.3%.
Lastly, consumer prices increased 0.75% in October over the previous month, accelerating from September’s 0.48% increase.
Outlook: Our panel expects the disinflation trend to continue in the coming quarters amid a high base effect and as the impact of past interest rate hikes filters through the real economy. Softer domestic demand will temper price pressures further. That said, persistent weakness in the ruble and labor shortages will keep inflation above the CBR’s target throughout our forecast horizon until 2029. Meanwhile, October’s slight downtick will likely not be enough to dissuade the Central Bank from tightening its stance further at its last meeting of 2024 on 20 December; our Consensus is for another 75 basis point hike by year-end.