Household inflation expectations hold close to all-time low in September

In September 2017, households’ inflation expectations for one year ahead alongside inflation observed over the last 12 months changed little if at all compared to August and held at their all-time lows, as shown by the data of inFOM survey commissioned by the Bank of Russia.

As price dynamics were moderate and no particular commodity group or service posted any upticks, there was a decline in the proportion of respondents citing strong price growth. The frequency of responses   mentioning substantial price growth in utilities, fruit and vegetables, gasoline, sugar and salt, bread, chicken eggs, cereals and pasta also decreased.

In the September poll, respondents were asked to gauge price growth in three marker products (fruit and vegetables, tea and coffee, sugar) for the first time and offer their expectations as to subsequent price movements. According to their answers, many respondents think that price growth has remained unchanged and expect the same growth in the future.

The current nature of inflation expectations points to persistent pro-inflationary risks. However, inflation anchored close to the 4% target, with monetary conditions remaining moderately tight, is set to foster a further reduction in household inflation expectations.

September saw a continued improvement in respondents' estimation of changes to their financial standing over the past year. People are therefore referring to the present time as favourable for large purchases with greater frequency. The consumer sentiment index rose in September. These trends, natural trends in the context of improving economic outlook, come without inflation risks.