Inflation slows to 4.3% in August on the back of fruit and vegetable price movements

Annual inflation slowed down to 4.3% in August after 4.6% in July. The annual price growth rate declined in all three components of the consumer basket: food products, non-food goods and services, notes the latest issue of Consumer Price Dynamics, informational and analytical commentary.

Growth in fruit and vegetable prices contracted the most considerably (by 4.2 pp, to 1.3%). However, price dynamics in this category are unstable and continue to fluctuate due to a shift in seasonality. This year, a warm spring contributed to an earlier delivery of vegetable crops than last year. The annual growth rate of food prices (excluding fruit and vegetables) slowed down by 0.1 pp, to 5.4%.

The annual growth rate of non-food prices dropped by 0.1 pp, to the June reading (3.5%). This was mainly driven by a persistently modest demand and the effects of the earlier ruble appreciation. A similar slowdown in inflation was registered in the services market.

According to the Bank of Russia’s forecast, inflation will come in at 4-4.5% as of the end of 2019. Moving forward, the pursued monetary policy will hold annual inflation close to 4%.