Business price expectations continued to decline in October

Short-term price expectations of businesses mostly lowered in October.

According to the Bank of Russia’s survey, price expectations were on the decline for the fourth consecutive month. These findings are given in the Bank of Russia’s new commentary ‘Inflation Expectations and Consumer Sentiment’.

However, expectations varied across industries. A rich harvest of most crops contributed to the decrease in price expectations in agriculture. A decline in world prices for metal ores impacted price expectations in the mining and quarrying sector. In contrast, price expectations in trade were up. Businesses raised their estimates of current and expected demand.

As was reported earlier, the slowdown of inflation drove households’ inflation expectations downwards (8.6% as compared to 8.9% in September). In October, respondents less frequently mentioned a significant rise in prices for individual goods and services, such as utilities, medicines, petrol, fruit and vegetables.

In addition to the expectations of businesses and households, the Bank of Russia also assesses the expectations for returns on financial instruments. According to the Bank of Russia’s estimates, four-year annual imputed inflation for OFZ-IN continued to decrease in October and came in at 3.1% (as compared to 3.5% in August), which is a new all-time low for inflation-indexed federal government bonds.