Russia’s inflation outlook and policy signals amid November data

The Central Bank of Russia reported that inflation expectations among the public eased in November 2022, yet they stayed elevated within the levels observed from April through October of the current year, according to a report from Interfax. The regulator also noted that businesses continued to see higher short term price expectations in November, signaling persistent price pressures across the economy. In this context, the bank described a balance of short term pro inflationary and disinflationary risks, while suggesting that pro inflationary pressures could gain traction over the medium term as the year progresses. In its assessment, the Central Bank projected the annual consumer price index to reach a range of 12 to 13 percent by year end. It also forecast a decline in inflation to 5 to 7 percent in 2023, with a further move toward 4 percent anticipated in 2024, reflecting a path of gradual stabilization in price growth. The Infom survey cited by the central bank indicated that public expectations for inflation cooled to 12.2 percent in November after climbing from 12.5 percent in September to 12.8 percent in October. On November 23, during a plenary session, the State Duma passed the government bill in its third and final reading, which set the living wage in Russia for 2023 at 14,375 rubles. Anton Kotyakov, the head of the Ministry of Labor, stated that starting January 1, 2023 the minimum wage and the living wage would be set above the forecasted rate of inflation, signaling a policy stance that aims to protect household purchasing power amid ongoing price dynamics. The combination of official inflation projections, survey data on expectations, and the legislative decision to index the minimum and living wages suggests a coordinated approach by monetary and social policy authorities to anchor expectations while supporting household income in the near term. Analysts note that these steps reflect a balancing act between ensuring wage growth that keeps pace with price increases and maintaining financial stability across the broader economy. The November data point reposition the narrative around inflation in Russia, showing that while the public’s fear of rapid price rises is easing somewhat, the path ahead remains linked to supply conditions, external factors, and the effectiveness of fiscal safeguards. Observers emphasize that continued vigilance is essential as the coming year unfolds, with policymakers monitoring inflation expectations, wage trends, and the evolving economic environment to calibrate policy levers effectively. Overall, the published indicators paint a picture of gradual easing in headline inflation while underlining the need for cautious optimism among households and businesses as the economy adjusts to the post pandemic and post sanction landscape.