Russian consumer inflation drops below 4% target for first time in a year
Reuters
Published Apr 12, 2023 12:08PM ET
Updated Apr 12, 2023 12:31PM ET
(Reuters) -Annual inflation in Russia dropped below the central bank's 4% target in March for the first time in a year, as the base effect of last year's double-digit price rises takes hold, data from the state statistics service Rosstat showed on Wednesday.
Inflation soared to almost 20% soon after Russia sent tens of thousands of troops into Ukraine last year. The central bank has said inflation remains an area of concern, though it expects it to move back above the target later this year, likely ending 2023 in the 5%-7% range.
In March, annual inflation stood at 3.51% year-on-year, down from 10.99% year-on-year a month earlier, the data showed. Analysts polled by Reuters had expected a slowdown to 3.4%.
On a monthly basis, the consumer price index (CPI) rose 0.37% in March after a 0.46% increase in February, the data showed, coming above analysts' expectations of a 0.2% rise.
The month-on-month rise of 0.37% in March equates to around 4.3% at a seasonally adjusted annual rate, said CentroCreditBank economist Evgeny Suvorov.
"That is a lot," Suvorov said. "Such figures (and also the strong decline of the rouble) may lead to the central bank raising rates at the April 28 meeting."
Central Bank Governor Elvira Nabiullina on Wednesday said the rouble, which eased inflationary pressure by strengthening last year, was more likely to have a pro-inflationary impact this year. The currency has lost almost 25% since an oil price cap on Russian exports came into force in early December.
Dmitry Polevoy, head of investment at Locko-Invest, said the central bank was unlikely to change its hawkish signal and would maintain concerns about inflation risks.
"But if (the risks) have decreased slightly from the budget side, then from the demand and exchange rate side, they have increased," Polevoy said. "Therefore, it seems the central bank will for now continue to see more chances of a rate hike than a rate cut."
Separate Rosstat data released on Wednesday showed consumer prices rose 0.11% in the week to April 10, compared with a 0.13% rise the previous week. Since the start of the year, prices have risen 1.84%, Rosstat said, a slower pace than in the same period of 2022.
The economy ministry said inflation was running at an annualised rate of 3.15% as of April 10, slowing from 3.29% a week earlier.
Analysts polled by Reuters believe above-target inflation will prevent the central bank from trimming its key rate this year, squeezing growth prospects.
Russian households regularly cite inflation as a key concern, with many having no savings after a decade of economic crises while rising prices dragged living standards down across the country.
Rosstat gave the following details:
Get The News You Want
RUSSIAN CPI March 23 Feb 23 March 22
Mth/mth pct change +0.37 +0.46 +7.61
- food +0.13 +0.79 +6.73
- non-food +0.14 -0.08 +11.25
- services +0.97 +0.72 +3.99
Y/Y pct change +3.51 +10.99 +16.69
Core CPI y/y pct change +3.72 +12.69 +18.69
Written By: Reuters
Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.