About inflation

Price movements in the economy are reflected by various price indicators, including producer price indices, the gross domestic product deflator, and the consumer price index. Inflation is generally associated with the consumer price index (CPI), which measures how prices for a set of food products, non-food goods and services consumed by an average household (i.e. the cost of the consumer basket) change over time. The CPI has been selected as the key inflation indicator because it plays an important role in measuring changes in the cost of living. In addition, the CPI has a range of features making it convenient for common use, namely a simple and clear method of construction, a monthly frequency of calculation, and timely publication.

The CPI may be calculated for different periods. Consumer price levels are most often compared month-over-month, year-over-year, and versus December of the previous year.

The Federal State Statistics Service is in charge of the statistical monitoring of prices, the corresponding calculations, and the publication of data on the CPI in Russia, including by region.

To analyse price dynamics in more detail, the Bank of Russia calculates multiple analytical indicators of price dynamics including by region.

The specific feature of the consumer basket in Russia, as generally across emerging market economies, is a relatively large share of food products (38.8% in 2025). Food prices are rather volatile. To a significant extent, fluctuations in food prices are related to changes in supply volumes, primarily the harvest of agricultural crops in Russia and abroad, which significantly depends on weather conditions. Since the proportion of food products in the consumer basket is high, fluctuations of food prices may materially impact inflation in general.

In addition, the Russian consumer basket used to calculate the CPI comprises goods and services with regulated prices and tariffs. Thus, the government regulates tariffs for a range of utility services, passenger transportation services, communication services, and some others. Furthermore, prices for tobacco products and alcoholic beverages considerably depend on excise rates.

Both domestic and imported goods and services satisfy consumer demand. There are no statistics on the proportion of imports in the CPI. However, the percentage of imports in the structure of retail trade commodity resources (around 40% until 2021) may give an understanding of this proportion in terms of goods. The sizeable share of imported goods in the consumer basket is the reason why changes in the ruble exchange rate substantially impact inflation.

Prices may grow more quickly or slowly, which is a rise or decline in inflation, respectively. In addition, there may be various reasons causing inflation movements. Let us consider them in the context of price growth acceleration.

If demand for goods and services grows faster than production capacities, demand-side factors exert proinflationary pressures. Accelerated demand growth may arise from excessively affordable loans or accelerated growth in nominal household income, if it outpaces labor productivity growth. 

Inflation may also increase when an imbalance in the economy arises because of insufficient supply, e.g., a poor harvest, export restrictions or a monopolist’s actions.

Inflation may also be driven by a steady increase in companies’ costs for producing and selling products due to rising prices for commodities, materials, components, and increased enterprise expenses on wages. Business costs pass through supply chains into prices for the end consumer.

Accelerated price growth may be associated with the depreciation of the national currency. In this case, imported goods become more expensive for both consumers and domestic producers. The overall impact of exchange rate movements on price changes is called the ‘pass-through’ and is often analysed as an independent inflation factor. A quantification of the Exchange Rate Pass-through is provided in the Monetary Policy Guidelines.

Economic theory distinguishes inflation expectations as a special factor–these are economic agents’ assumptions regarding future inflation. Manufacturers take into account expected inflation levels when making decisions on prices for their own products, salaries, output and investment. Households’ inflation expectations impact their decisions on amounts of available funds to be saved or spent. Economic agents’ decisions influence the demand for and supply of goods and services, and ultimately, inflation.

The analysis of price dynamics is published in Inflation in Russia. By region – on the regional branches web pages.

High inflation diminishes the purchasing power of income of all economic agents, which negatively affects demand, economic growth, living standards, and public sentiment. When income declines in value, this limits possibilities and discourages savings, hindering the creation of a stable financial environment for investment. In addition, high inflation may also be pushed by increased uncertainty, complicating decision-making by economic agents. All the above adversely impact savings, consumption, output, investment, and generally, the conditions needed for sustainable economic development.

Price stability means that the overall price growth is consistently low, predictable, and does not alter day-to-day and long-term financial decisions of households and businesses.

When inflation stays low and predictable, households tend to save money in the national currency for long periods without worries, being confident that their deposits will not decrease in value due to inflation. In turn, long-term savings are a source of funds for investment. When prices are stable, banks are ready to extend long-term loans to borrowers at relatively low interest rates. Therefore, price stability creates an environment for investment growth and, ultimately, for sustainable economic development.