Russians more optimistic about future inflation and living standard

Russians’ inflation expectations declined further in May 2017 as actual inflation moved closer to the target level (4%), finds the Bank of Russia in the current issue of its commentary titled ‘Inflation Expectations and Consumer Sentiment’. According to the recent inFOM survey commissioned by the Bank of Russia, direct estimates of households’ inflation expectations for the year ahead touched a new record low. Respondents were also found to be more optimistic as regards the future living standard.

The current monetary policy stance remains moderately tight to ensure inflation stays close to target and to further reduce inflation expectations.

When asked to identify goods and services with the strongest growth in the past month, respondents’ answers took into account a decline in actual inflation. In this way, less frequently mentioned were utility payments, pharmaceuticals, cigarettes, eggs, tea and coffee, as their prices in April were in fact growing at lower paces or declining.

May 2017 saw an upgrade in evaluations of the current financial standing of those surveyed by inFOM, as well as in their expectations for next year. A gradual improvement in financial standing alongside favourable price trends was also reflected in the answers about the need to save. Respondents stated less frequently that they dropped their previously planned major expenses, especially on home repair.  Likewise, fewer respondents mentioned the need to save on everyday goods and services.