Page 29 - RusRPTApr19

4.2 Inflation
After falling to post-Soviet all time lows last year, inflation has been rising this year and was already over the central bank’s target rate of 4% at the start of this year.
Inflation has partly been lifted by an increase in the VAT rate by two points to 20%, but the regulator says this effect is already proving to be mild and will wear off soon.
Inflation is now expected to peak at about 5.5% in the middle of this year before falling again to end the year close to 4%.
4.2.1 CPI dynamics
The Russian consumer price inflation index will reach the central bank’s target of 4% quarterly by July, Central Bank Chairwoman Elvira Nabiullina told President Vladimir Putin on March 4. “We assume that quarterly inflation will meet 4% by the middle of the year. The statistic effect of high prices will persist but in general, it will reach the trajectory of 4% by the middle of the year and we hope, we expect and pursue such policies that it would be close to 4% next year,” Nabiullina said.
She said that the banking system has enough profit and capital to finance the economy. Retail crediting grows by 1.3%, corporate crediting by 0.8%. The central bank hopes that mortgage rates will stabilize and monitors the situation. Nabiullina said that in 2018, mortgage lending soared by almost 50% to about 3mn loans and interest rates were low “but of course, they went up a bit over the last month.”
Having surged at the start of 2019 on VAT hike and higher utility tariffs,
29 RUSSIA Country Report April 2019 www.intellinews.com