Page 27 - RusRPTJul19

4.2.1 CPI dynamics
Russia’s inflation in May slowed to 5.1%.
Russian Economy Minister Maxim Oreshkin said in June that the Bank of Russia’s new inflation forecast of 4.2%-4.7% for 2019 seems too high, TASS reported.The central bank on Friday lowered its inflation forecast for this year from a previous range of 4.7%-5.2%, while cutting its main interest rate to 7.50% from 7.75%. The economy ministry expects the annual inflation rate to be below 4% by the end of the year, Oreshkin said on Thursday.
In May, households’ inflation expectations and business price expectations did not materially change and remain elevated. Economic growth in the first half of 2019 is lower than the Bank of Russia’s expectations. Short-term pro-inflationary risks have abated compared to March the regulator said in June, explaining its decision to cut the inflation forecast. “The revised forecast takes into account the completion of the VAT increase pass-through to prices (including the influence of secondary effects) and the preservation of relatively favorable external conditions and moderate dynamics of domestic demand. Moving on, according to the Bank of Russia’s forecast, annual inflation will stay close to 4%,” the regulator said.
27 RUSSIA Country Report July 2019 www.intellinews.com