“A Different Rate of Inflation”
Experts are noting a shift in Russia’s inflation trajectory this year. A senior official suggested the inflation rate could remain high, with estimates ranging from the mid-teens to around twenty percent. This outlook reflects ongoing economic pressures and the evolving impact of sanctions on trade and domestic demand.
During a media briefing, the head of the Accounts Chamber indicated that if Western sanctions persist, Russia may require at least two years to rebound. The assessment emphasized the need to separate short-term adjustments from longer-term rebuilding, especially in the context of import substitution for a variety of goods. The official warned that sanctions at their current level are likely to endure for about two years, marking the initial phase of a broader recovery plan that could take many years to complete.
Inflation slowdown
Earlier on Wednesday, First Deputy Prime Minister Andrei Belousov spoke before the Federation Council and highlighted a deceleration in weekly inflation, noting a drop to 0.66 percent in the period from April 2 to April 8, down from 2 percent in the preceding week. He attributed the early inflation surge to strong consumer demand and reduced imports, while the government took measures to blunt the impact of price hikes. Belousov referenced a preliminary period after sanctions were imposed during which prices rose by about 2 percent each week, before sliding to sub-1 percent weekly increases. He cited data from socialbites.ca indicating the latest weekly figure of 0.66 percent.
Belousov also noted that consumer prices had climbed by roughly 10 percent since sanctions began. He pointed to specific goods: the price of a basic set including sugar and borscht rising by 50 to 60 percent; durable food items such as salt, flour, and cereals increasing by 10 to 20 percent; and non-food items, heavily dependent on imports, rising by about 16 percent.
According to the official, March 20 marked a stabilization in demand for socially important goods, with retail stock levels returning to norms for major categories. He stated that sugar reserves were already sufficient for more than two weeks, oil for more than five weeks, flour and cereals for five to six weeks, and baby and canned foods for ten to twelve weeks. He described the trade situation as stable and under control.
Belousov added that monetary measures had been prepared to mitigate the inflation impact for pensioners, low-income households, and families with children, as directed by the president. He stressed that those steps aim to cushion vulnerable groups amid price pressures.
accelerating inflation
RIA Novosti reported that the Bank of Russia and the Ministry of Economic Development were set to unveil new forecasts in April. The Central Bank had surveyed analysts in early March, which projected annual inflation near 20 percent by December, with a slower pace in 2023 and a further easing to about 4.8 percent in 2024.
Data drawn from Rosstat via Interfax showed inflation in the period from March 26 to April 1 at 0.99 percent, following a 1.16 percent rise from March 19 to March 25 and a sequence of higher monthly increases earlier in March. Rosstat’s reporting indicated a 7.61 percent year-over-year rise in inflation on April 8 and a broader 16.69 percent annual increase across the year. The service also noted price increases in 32 regions for consumer goods during the same period.
Rosstat’s findings highlighted a year-on-year ascent in food prices by about 6.73 percent in March, with year-over-year food costs approaching 17.99 percent from February to March. Non-food products rose roughly 11.25 percent year over year, and services grew about 3.99 percent month over month, with a roughly 9.94 percent year-over-year increase.
On April 8, the Central Bank of Russia stated that annual inflation would continue higher in the near term, citing difficult external conditions that would persistently constrain economic activity. The bank also reduced the key rate to 17.00 percent per annum as part of its monetary policy stance. Officials noted that while base effects would push prices higher in the near term, recent weekly data suggested a meaningful slowdown in overall price growth, aided by exchange rate dynamics and government support programs. The bank signaled that policy would respond to evolving external and domestic conditions, market responses, and actual versus expected inflation toward its target, with possible rate adjustments in the forecast horizon as needed. A closely watched signal from the Federal Reserve acknowledged the possibility of continued rate cuts in upcoming meetings, influencing global financial conditions and inflation dynamics across the region.
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