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Q1 inflation rate set to remain historically low

19 January 2018
News

2018 Q1 inflation is set to hold near its December reading. Moving forward, inflation is forecast to return gradually to 4%, as the one-off factors related to good crops and foreign currency exchange fluctuations, as well as a recovery in consumer demand, peter out. These are the findings presented in the new issue of ‘Consumer Price Dynamics’, a BoR regular information and analytical commentary.

Food inflation in December was unchanged from the previous month. The shorter supply of individual vegetables was offset by a saturated market of other food categories (meat, poultry, milk and sugar).

Non-food products continued to grow at historically low annual rates. Over 2017 as a whole, there was a reduction in the prices of household appliances and pharmaceuticals.

Against the backdrop of recovering consumer demand, December saw a rise in the prices of services, in large part on the back of international tourism, education and sanatorium-and-spa services.

Conditions are gradually emerging for consumer prices to perform in a consistently less volatile fashion, helped by the advances in the agricultural sector and large-scale warehouse construction, which is set to impart more steadiness to food inflation in Russia. Moreover, inflationary pressures will be markedly diminished by a less volatile foreign exchange rate.

Preview photo: HelloRF Zcool / shutterstock