Inflation down in February, however inflation risk balance shifts in March
In February 2020, disinflationary trends persisted amid the overall high saturation of the food market, subdued demand, and time-lag effects of the ruble appreciation in the previous months. At the same time, external conditions have significantly altered since the beginning of March, which was associated with the spread of the coronavirus epidemic outside China and a deterioration of the situation in the oil market, notes the latest issue of Consumer Price Dynamics, information and analytical commentary of the Bank of Russia.
The aforementioned circumstances have entailed a weakening of the ruble, which is a material, but short-term proinflationary factor. Inflation will return to the Bank of Russia’s target from the low levels of recent months faster than previously forecast.
However, the significant and long-lasting slowdown in the global economy, as well as the impact of increased uncertainty, and the tightening of monetary conditions on domestic demand may become material disinflationary factors over the medium-term horizon.
The Bank of Russia will comprehensively consider the effect of the recent changes on the medium-term forecast of inflation, inflation expectations and economic developments and assess the risks of sustainable deviation of inflation from the target over the forecast horizon.