Inflation expectations change only slightly in August
In August, InFOM resumed the Bank of Russia-commissioned representative surveys of households across Russia conducted as personal interviews. Households’ inflation expectations were above the readings recorded in March when the previous survey was carried out, comparable in terms of method used. According to the new issue of the Bank of Russia’s information and analytical commentary ‘Inflation expectations and consumer sentiment’, businesses and financial market participants slightly increased their inflation expectations, while analysts’ forecasts for 2020 remained unchanged.
The survey showed that inflation expected (8.8%) and observed (9.2%) by households exceeded the levels recorded in March (7.9% and 8.3%, respectively). Currently, both observed and expected inflation is close to the average readings of 2019 Q4.
The Bank of Russia’s monitoring demonstrated that businesses’ short-term price expectations slightly rose. Nonetheless, the average annual price growth rate expected by companies remains low, equalling 1.9% in August. Businesses’ price expectations changed diversely across different industries. The service sector demonstrated the most significant growth of price expectations, mostly due to higher input prices and costs. Retail trade recorded the largest decrease in price expectations, which was associated with lower demand expectations.
August recorded a slight rise in inflation expectations taken into account in prices for financial market instruments. Analysts’ forecasts for 2020 and 2021 remained below 4%.