Inflation slows down but remains elevated in July

Annual inflation slightly decreased to 6.46% in July. As growth of prices for fruit and vegetable products slowed down significantly, non-food goods prices rapidly increased. Growth of services prices also decelerated somewhat, and their dynamics remain mixed amid changes in anti-epidemic regimes in Russia and abroad.

Price growth slowed down mainly due to one-off effects: this season saw an earlier drop in vegetable prices; foreign travel costs also went down. Price growth rates of many food product groups declined, including owing to Government’s measures to smooth the impact of global prices. At the same time, current growth of prices for non-food goods accelerated on the back of expanding demand and rising producer costs related to rapid growth of global commodity prices. Indicators of sustainable price movements remain elevated.

According to the Bank of Russia’s forecast, annual inflation will reach 5.7–6.2% in 2021. Given the monetary policy stance, it will edge down to 4.0–4.5% in 2022 and will remain close to 4% further on.