Page 49 - RusRPTOct23

4.2 Inflation
One of the main contradictions in the news 2024 budget is the forecast includes low inflation of 4.5% in 2024. This figure must be achieved with a sharp increase in budget expenditures, a weakening ruble, a significant increase in tariffs and the government’s planned continued growth in real disposable income (2.7% in 2024) and real wages (2.5%) while maintaining a staff shortage. Given such an abundance of pro-inflationary factors, the Central Bank will be forced to keep the key rate high, which the regulator has already warned the Duma about. After the latest increases, the Central Bank rate is already 13%.
Inflation in Russia will remain at rather high levels throughout 2024, Economic Development Minister Maksim Reshetnikov said addressing the Federation Council. "Inflation in December y/y is 7.5%, while next year’s average annual inflation is 7.2%. In 2024, December [inflation] y/y is 4.5%. We expect it to decline, though it will remain at notable levels throughout next year," he said. Earlier, the Economic Development Ministry raised its inflation outlook for 2023 from 5.3% to 7.5%. Egorov said.\
Inflation expectations are continuing to grow. Long-term inflation expectations for five years also rose to 11.4%. Price expectations of businesses for the next three months reached their highest level since April 2022. The consumer sentiment index declined, returning to the level of February 2023, while the respondents’ propensity to save increased.
49 RUSSIA Country Report October 2023 www.intellinews.com