Page 41 - RusRPTJul21

4.2 Inflation
Consumer prices in Russia jumped 6.0% in May of 2021, following a 5.5% increase in the previous month and rose faster than market expectations of a 5.8% hike.
The latest reading remained well above the central bank's 4% target and it was the highest inflation rate since October of 2016, mainly driven by prices of food (7.4%), non-food products (6.7%), and lastly, services (3.3%). On a monthly basis, consumer prices went up 0.7%, following a 0.6% advance in April and compared to forecasts of a 0.6% rise.
CBR Governor Elvira Nabiullina said on June 30 the central bank has not ruled out changing its inflation target from the current 4%, which has been in place for five years. Nabiullina added that the CBR was previously reluctant to switch to a target range as doing so could encourage inflation expectations to stick at the upper end of the range. However, since then the economic system and the attitude toward CBR policy have changed. The bank is planning to issue research devoted to a possible change in its approach. We understand that the CBR intends to discuss:
· Whether the inflation target should be a point or a range.
· Whether 4% is an appropriate target.
41 RUSSIA Country Report July 2021 www.intellinews.com