Conditions are evolving for inflation to head back to 4%
Annual inflation rose to reach 2.5% in July 2018 vs 2.3% in June and 2.4% in the spring months. Once normalised, consumer price movements will help return annual inflation to 4% before the end of the year. The forecast is presented in the current issue of ‘Consumer Price Dynamics: Facts, Assessments and Comments’, a BoR commentary.
The two factors behind July’s normalisation of food price movements are the low base effect (vegetables) and a changing supply and demand balance (meat and dairy products). The balancing of supply and demand in food markets is expected to become complete over the next few months.
Bank of Russia estimates show the final impact of the World Cup on inflation totalled under 0.1 percentage points. This July saw a correction in airline fares and hotel rates, following their short-term rise in the prior month amid mounting demand from football fans.
Annual inflation in August is estimated at