Page 43 - RusRPTApr21

4.2 Inflation
Inflation in Russia reached its peak in February, according to the Ministry of Economy, and the consumer price index will start declining soon in annual terms, Minister of Economic Development Maxim Reshetnikov told reporters on March 25.
"We have reached the inflation peak at the moment; [it] stabilized at the level of 5.8% as early as a week ago," Reshetnikov said. "This is despite the fact we had the weekly inflation of 0.2% last week, or 0.18%, if detailing to two decimal places. There was a dip - 0.1% a week earlier; it was regrettably maintained with the further return to the level of 0.2%, and it is stable. At the same time, when talking about annual inflation, we have the decline - 5.7%," he noted.
The CBR surprised with a 25bp rate hike on March 18 as it had underestimated inflationary pressure.
The Bank highlighted that both demand and supply-side pressures have turned the balance of risks to pro-inflationary. On the demand side, faster than anticipated recovery in domestic demand, relaxation of domestic Covid-related restrictions, and persisting restrictions on foreign travel are pushing up consumers’ domestic purchasing capacity. On the supply side, supply chain disruptions (and, potentially, downsizing of staff during the pandemic), have meant that in certain sectors demand is now exceeding supply. As a result, core inflation is also well above target – at 5.9%.
43 RUSSIA Country Report April 2021 www.intellinews.com