Household inflation expectations reach all-time low
In February, the inflation expected by households (7.9%) approached the lowest reading registered by the inFOM survey, notes the latest issue of the Bank of Russia’s commentary ‘Inflation expectations and consumer sentiment’. Only once has expected inflation showed a lower reading (7.8%), in April 2018.
Headline inflation rose slightly, but remained lower than last year’s average reading. Respondents paid more attention to the rise in utility rates which usually takes place in January.
Short-term price expectations of businesses were mixed. A PMI survey points to slack price pressure, whereas the Bank of Russia’s monitoring of enterprises registered growth of price expectations. As in the previous months, business representatives noted that weak demand and high competition were the major drags on price growth.
Analysts’ forecasts for 2020 continued to decrease. Inflation expectations taken into account in the prices of financial market instruments remained low.