In April, household inflation expectations pick up slightly, and those of companies – decline

Inflation expectations of economic agents showed mixed dynamics in April. Household inflation expectations picked up slightly, whereas businesses’ price expectations and assessments of long-term inflation expectations by financial market participants continued to decline. This is evidenced by data given in the current Bank of Russia commentary ‘Inflation Expectations and Consumer Sentiment’.

The certain increase in household expectations registered after a drop in February—March might be influenced by the perception of price level, rather than their movements. For example, 30% of respondents noticed an increase in petrol prices in the past month, though they have been almost unchanged since last July. This might be the result of concerns over new episodes of accelerated price growth amid a certain deterioration in consumer sentiment in April.

According to the Bank of Russia’s business survey, in April companies’ price expectations for three months ahead continued on a downward trend that has been ongoing since February. The decline was registered across all industries and regions, pointing to a fading effect of the general factor — the VAT hike. The trend towards a decline in inflation expectations of financial market participants for four and nine years ahead continued.