The Central Bank has warned about the risks of “freezing” of inflation


Inflation in Russia is gradually approaching the Central Bank target of 4%, but may “hang” at 5%. This is stated in the November newsletter “as evidenced by trends,” prepared by the Department of studies and forecasting of the Bank of Russia.

In particular, in the coming weeks, the increase in food prices may remain high due to renewed growth of prices for some food products in world markets, stated in the newsletter.

In particular, prices for milk and dairy products continue to grow at a rapid pace, the experts of the Department. “This contributes to the continuing growth of world prices for dairy products, which are tightened to the recommended minimum export prices for dairy products from Belarus”, — they write. Import of dairy products from this country to Russia, according to the UN Comtrade Database, which are referenced in the Department of the Central Bank, increased from 33 (in 2012) to 74% (in 2015). In the coming weeks, the accelerated growth of prices for milk and dairy products may continue, the document says.

Another risk for the achievement of the inflation target, the experts say, is the instability of inflation expectations. The results of the survey conducted, OOO “infa”, the median value is expected in the year ahead, inflation in November rose to 13.7% from 12.3% in October, noted in the Bulletin. “Strong fluctuations of this indicator in the second half after a fairly rapid and monotonic decrease indicate the presence of risks to inflation due to the possible zakalivanie expectations at a higher level” — believe in the Department of studies and forecasting of the Bank of Russia.

The Central Bank expects to reduce inflation to the targeted level of 4% by the end of 2017. In 2016, according to the expectations of the Bank of Russia, inflation will be 5.5–6%. According to Rosstat, in November 2016, it was 5.8%

The head of the Bank of Russia Elvira Nabiullina December 2, stated at the plenary session of the state Duma that in the next year and a half monetary policy of the regulator will remain moderately tight. According to her, this means that the Central Bank will form rates in the economy at a level above inflation. “Low interest rates in the current environment can cause the growth of attractiveness of investments in dollar assets and cause the weakening of the ruble. This will lead to inflation and reverse the growth rates,” explained Elvira.

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