Fast decline of food inflation continues in October

In October, annual inflation slowed down to 3.8% (-0.2 pp as compared to September). Annual growth of prices for all core consumer basket components decelerated, most significantly for food products (by 0.4 pp to 4.2%). These are the findings presented in the new issue of the Bank of Russia’s information and analytical commentary ‘Consumer Price Dynamics’.

Food inflation decreased primarily because growth of meat, poultry and egg prices continued to decline, and sugar prices also dropped as before, while market supply of these products was up. Growth of prices for grain products slowed down due to a good harvest.

As before, disinflationary factors dominate. According to the commentary, given the current price dynamics, by the end of 2019 inflation will probably come close to the lower bound of the range forecast by the Bank of Russia (3.2–3.7%). Taking into account the influence of the earlier decisions on the key rate cut, the Bank of Russia expects that inflation will range from 3.5% to 4.0% by the end of 2020 and will stay near 4% going forward.