Inflation declines ahead of forecast

In October 2017, annual inflation slowed down to 2.7%, undershooting the Bank of Russia’s forecast path. This occurs mainly on the back of significant growth in the supply of farm products and delayed harvesting, according to the latest issue of ‘Consumer Prices’, a regular BoR information and analytical commentary.

This October’s record crops sent prices on cereals and legumes lower; sunflower oil and vegetable prices were also down. The rise in food prices was overall at its lowest since the start of the year (1.6%).

The strengthening of the ruble, amid rising oil prices, made a strong contribution to the decline in inflation. This factor was behind October's drop in fruit / citrus fruit prices, as well as electrical products, home appliances, television sets, medical supplies and the costs of leisure travel across several European and Asian destinations. Prices of services grew 4.2% year to date; non-food goods prices were up 2.8%.

Inflation is expected to stay under 3% for the year-end and in the first half of 2018; as the temporary tailwinds run their course, it is projected to edge higher albeit holding close to 4%.