Page 32 - RusRPTOct21

4.2 Inflation
Inflation was 6.5% in June and July and ticked up to 6.7% in August. Inflation expectations remain strong.
According to bank of Russia assessments, thealance of risks remains largely skewed towards pro-inflationary ones. The contribution of stable factors to inflation increased due to faster growth of demand compared to output expansion capacity. The risks of secondary effects spurred by elevated inflation expectations remain significant.
According to the bank of Russia’s forecast, annual inflation will reach 5.7- 6.2% in 2021. Given the monetary policy stance, annual inflation will edge down to 4.0-4.5% in 2022 and will remain close to 4% further on.
Russia’s annualized inflation based on a three month moving average of m/m seasonally adjusted core inflation dropped for the 1st time in 10 months in August. This is a great measure of current inflation (unlike y/y data) and possibly one of the reasons for 25 not 50bp hike last Friday
32 RUSSIA Country Report October 2021 www.intellinews.com