Economic entities’ inflation expectations remain elevated in June

Households’ inflation expectations and business price expectations remained elevated in June –despite slower inflation, according to the Bank of Russia’s latest commentary ‘Inflation expectations and consumer sentiment’.

Inflation expectations of households remained almost unchanged at 9.4% vs 9.3% in May. The median estimate of inflation observed by households in the past 12 months has neither seen any significant changes.

However, there have been some improvements in responses concerning price movements for some goods and services. For instance, fewer respondents observe any considerable price gains for meat and eggs – households’ biggest concern for the past several months.

Business price expectations also remain elevated. They rose somewhat in June following a decline in the preceding four months. The most notable surge in expectations came from companies in mining and quarrying (influenced by global price changes) and construction (due to the new project financing arrangement). In the meantime, enterprises in agriculture, services and retail reported lower inflation pressure. This suggests that low-level risks for consumer prices will sustain in the coming months.