Inflation in Russia will be 5-5.5 percent by the end of next year. This forecast was given to socialbites.ca by Maxim Petronevich, head of the macroeconomic and regional analysis and forecasting center of Rosselkhozbank.
The inflation target of the Central Bank of the Russian Federation is 4 percent for the end of 2024 and will be kept close to this level in the future. Therefore the forecast is more pessimistic.
“For inflation to reach 4-4.5 percent by the end of 2024, it will require a sudden slowdown in price growth from the beginning of the year, for which there are currently no prerequisites. Petronevich said that although the peak of monthly inflation rates will be reached in January 2024, inflation on an annual basis will reach its maximum.” He stated that it will reach its level only in the second quarter.
He added that the Central Bank’s key interest rate policy is now largely based on emerging macroeconomic data. If there is no slowdown in the price increase rate at the beginning of the year and the effect of factors supporting inflation does not decrease, the Central Bank may continue to increase interest rates as of the first meeting of next year (February 16). the analyst believes this. These factors include the growth of wages and retail trade, lending, the weakening of the ruble and the increasing inflation expectations of the population.
“The predictability of inflation is much more important than its level; As long as it stays within 6-8 percent. The 4-4.5 percent target should not be a goal in itself. If it takes the entire first half of 2024 for monthly inflation rates to slow down, this will not cause irreparable damage to the Russian economy. It is very important to prevent the 4% target from being reached in an environment where price increases accelerate for some goods and services, and demand for some goods and services decreases sharply, with little influence from the Central Bank policy. ” concluded Petronevich.
The Central Bank expects inflation to be 5.0-6.5% by the end of 2023. On December 15, the regulator for the fifth time in a row raised By increasing the key interest rate by 100 basis points to 16% annually, it explains this decision with inflationary pressure.
Former Central Bank Deputy Governor Zabotkin didn’t ignore it Reduction in interest rates in 2024.