Inflation in Russia

Russia - Inflation

Inflation comes in at highest level since June 2016 in September

Consumer prices increased 0.60% over the previous month in September, accelerating from the 0.17% rise logged in August. The upturn was chiefly driven by higher food price growth, while prices for services were flat from the previous month in September.

Inflation increased to 7.4% in September, following August’s 6.7%. September's figure marked the highest inflation rate since June 2016. Meanwhile, the trend pointed up, with annual average inflation coming in at 5.7% in September (August: 5.4%). Finally, core inflation rose to 7.6% in September, from August’s 7.1%.

Commenting on result, Dmitry Dolgin, Chief Economist at ING, noted:

“The huge CPI surprise of September-October pushes our 2021 expectations to 7.0% and 2022 forecast to the 4.5-5.0% range. More importantly, the current CPI trend means a noticeable deviation from the trajectory implied by the Bank of Russia's medium-term forecast.

On monetary policy outlook, Dmitry Dolgin said:

“Even if the current pick-up in inflation is caused largely by non-monetary and temporary factors, it still warrants a reaction from the CBR in order to address local expectations that are currently elevated and unanchored. We are now more confident that at the upcoming CBR meeting on 22 October the CBR will increase the key rate by a higher-than-usual 50 basis points to 7.25%, raise the official year-end CPI forecast to 6.5-7.0%, express doubts in the return to the targeted 4% in 2H22, and guide for a further increase in the key rate.”

FocusEconomics panelists see inflation inflation averaging 6.1% in 2021, which is up 0.2 percentage points from last month’s estimate, and 4.6% in 2022, which is up 0.3 percentage points from last month’s estimate.