Inflation expectations trend down in June
Inflation expectations of both households and businesses continued to lower in June, according to the information and analytical commentary Inflation Expectations and Consumer Sentiment. This downward trend is associated with the intensifying impact of weak demand and the strengthening of the ruble.
According to the findings of the Bank of Russia-commissioned telephone survey of households carried out by InFOM in June, inflation expectations will maintain the downward trend for the next month. Respondents became more positive about the current price growth rate, more rarely complaining about a significant rise in prices for non-perishable products, medicines, fruit and vegetables.
The monitoring of businesses carried out by the Bank of Russia in June 2020 revealed that businesses’ price expectations for the next three months lowered, while still staying elevated. Contrastingly, construction and service companies’ expectations increased. Representatives of these industries suggest that demand may grow in the next few months.
The Bank of Russia forecasts that annual inflation will probably go up gradually over the remainder of the year. Given the current trends, annual inflation as of the year-end 2020 is most likely to trend towards the lower bound of the 3.8 — 4.8% forecast range.