Russia: Inflation shoots up in December
Latest reading: Inflation jumped to 9.5% in December from November’s 8.9%, marking a near two-year high as sharp currency weakness made imports more expensive. As a result, December’s figure moved further above the 4.0% target of the Central Bank of Russia (CBR), though the print undershot market expectations. Looking at the details of the release, the upturn was broad-based as costs for both goods and services rose at a faster pace.
Accordingly, the trend pointed up, with annual average inflation rising to a year-and-a-half high of 8.5% in December (November: 8.3%). Moreover, core inflation climbed to 8.9% in December from November’s 8.3%.
Lastly, consumer prices increased 1.32% in December over the previous month, ticking down from November’s 1.43% increase.
Outlook: Our panel expects inflation to remain close to December levels in H1 2025 as currency weakness, labor shortages and past fiscal stimulus fuel sticky price pressures. The disinflation trend should then resume in H2 as the effect of past interest rate hikes filter through the economy, and as domestic demand turns more sluggish. That said, our Consensus is for inflation to remain above CBR’s target throughout our forecast horizon to 2029. Further trade restrictions fueling further depreciation of the ruble is a key upside risk.