Inflation expectations continue to grow moderately in January
Inflation expectations of households, business, and analysts sustained moderate growth in January 2019, according to the new issue of ‘Inflation Expectations and Consumer Sentiment’, a Bank of Russia commentary. The growth is mainly associated with tax and exchange rate-related drivers of inflation.
According to an inFOM poll, households’ inflation expectations moved upwards of the respondent-perceived gauge of inflation for the first time in January of this year. This takes respondents’ forecasts for future inflation to a higher reading than currently observed. The key factor behind the rise in households’ inflation expectations is accelerated actual inflation.
Corporate inflation expectations also remained on a growth path. The most noticeable growth is seen in wholesale and retail, mainly as a result of the VAT rise and exchange rate developments. In manufacturing, higher price growth expectations were chiefly specific to consumer product manufacturers. At the same time, companies in the mining sector reported lower expectations for price growth in the context of lower oil prices.
Analysts’ inflation forecasts continued their upward correction as they closed in on the Bank of Russia's estimate. They are nevertheless lower than the latter