Page 65 - RusRPTApr24

4.2 Inflation
The rise in Russian inflation to 7.7% y/y in February highlights that price pressures in the economy remain strong and we think inflation is likely to increase further in the coming months. We doubt these figures are strong enough to prompt another interest rate hike from the central bank. The more likely scenario at this stage is that interest rates remain on hold at 16.00% for most of this year.
The outturn was up from 7.4% y/y in January and a touch stronger than the consensus expectation (7.6% y/y). Consumer prices rose by 0.7% m/m. The breakdown showed that food inflation stabilised at 8.1% y/y while non-food goods inflation hit a 13-month high of 6.6% y/y and services inflation edged up to 8.5%. Rosstat’s measure of core inflation rose from 7.2% y/y in January to 7.6% y/y last month.
Inflation expectations are falling. According to the Bank of Russia, inflation expectations of the population in February decreased by 0.8 percentage points. up to 11.9% over a 1-year horizon and by 0.5% to 9.3% over a 5-year horizon. At the same time, the consumer sentiment index is at its highest level since the start of the pandemic, which is reflected in the continued growth of consumer activity at the beginning of 2024. Price expectations of enterprises dropped even more significantly in February. The average rate of price growth expected in the next three months in annualized terms decreased by 3.0 percentage points. up to 5.3%. At the same time, analysts surveyed by the
65 RUSSIA Country Report April 2024 www.intellinews.com