Inflation to decline further to target level

In April, annual inflation decreased by 0.1 pp to 5.2% and is set to slow further. The Bank of Russia’s forecast suggests that annual inflation will return to the near 4% target in 2020 H1, notes the latest issue of the Consumer Price Dynamics: Facts, Assessments and Comments commentary.

Annual food inflation remained unchanged in April whereas growth in prices of fruit and vegetables showed a significant decline. Prices of grain products continued to make a tangible contribution to food price growth. That said, good grain crop forecasts and falling prices in the global market lay the groundwork for slower price growth in this consumer market segment.

Annual growth in non-food prices decreased on the back of slower price growth of oil products. The effective agreement between the Government and oil majors held petrol prices unchanged while the price of diesel fuel dropped.

Services price growth declined too. A stronger ruble had a favourable effect on prices of outbound travel services.

In April, the share of goods and services whose prices rose at the fastest pace shrank, while the proportion of items posting the lowest price growth expanded; this suggests that inflation may slow down further.