Inflation expectations of Russians hit all-time low in April

As price growth continues to slow, Russians are increasingly convinced of the attainability of the 4% inflation target. An inFOM survey commissioned by the Bank of Russia suggests that direct estimates of households’ inflation expectations for the year ahead hit an all-time low in April 2017.

However, the estimates remain considerably above the target. The related pro-inflationary risks suggest that monetary policy should remain moderately tight.

Respondents to the survey offered more positive estimates of current price growth on the back of low monthly inflation. Diary products, which saw slower price growth in February and March, were less frequently mentioned in responses to questions about goods and services with the most pronounced price growth last month.

In April, there was practically no change in respondents’ estimates of their financial standing over the previous year. Moreover, their expectations of its improvement in the coming year remain hesitant. The stabilisation of financial standing and favourable price dynamics resulted in a slight improvement in respondents’ sentiment towards large purchases. Respondents to the survey spoke more frequently about purchasing household appliances which saw a decline in prices as the ruble appreciated in recent months. That said, respondents continue to highlight their need to save.