Inflation decline in February was faster than expected

Disinflation in February was above expectations thanks to a moderately tight monetary policy and Ruble appreciation, as stated in ‘Talking Trends No. 2 (2017)’, a bulletin issued by the Bank of Russia’s Research and Forecasting Department.

According to preliminary estimates, price growth over the past month was lowest as compared to all historical observations for February. Current disinflation is partially explained by temporary factors related to appreciation of the Ruble and good harvest. The latter conclusion is largely illustrated by prices for fruits and vegetables that grew well below normal seasonal levels for February. Inflation expectations are on a downward trend, but still remain fairly unstable.

Dynamics of economic activity and main leading indicators point at the end of stagnation and gradual transition to economic growth. Signs of revival in both consumer and investment demand are observed. In this respect Bank of Russia’s moderately tight monetary policy played a crucial role by ensuring decrease in macroeconomic uncertainty. Further positive impact on economic growth also comes from relatively favorable external conditions.

The views expressed in the Bulletin are solely those of the authors and do not necessarily reflect the official position of the Bank of Russia.