Households’ inflation expectations in December return to September levels
Both households and businesses increased their estimates of future inflation in December, according to the Bank of Russia’s commentary Inflation Expectations and Consumer Sentiment. Analysts have lowered their 2019 and 2020 forecasts. Expectations for returns on financial market instruments also stabilised at a low level.
According to households’ expectations in December, inflation will reach 9.0% in the next 12 months. In November, this estimate was 8.3%. Therefore, after a short drop, households’ inflation expectations returned to the September levels.
In December, respondents generally more often mentioned a rise in prices for the most frequently purchased goods and services, including dairy products, fish, eggs, cheese, sausages, fruit and vegetables, as well as petrol and utilities.
According to the survey of businesses carried out by the Bank of Russia in December, their short-term price expectations also slightly increased. However, the dynamics of price expectations were diverse across industries. Trading and service companies, as well as manufacturing enterprises raised their price expectations. In addition to sectoral factors, many businesses referred to forecast demand growth as the main driver of future inflation.