Inflation stabilises at low level

Inflation has slowed down to new lows on the back of temporary factors. The risks that inflation may overshoot 4% in the medium term have abated recently but still remain, notes the Bank of Russia’s Research and Forecasting Department (R&F) in the new issue of the Talking Trends bulletin.

October–November saw inflation drop below 3% while households’ inflation expectations reached the all-time minimum. Core inflation readings also stabilised at low levels. At the same time, expectations are reasonably high that some acceleration in consumer prices is possible relative to their current reading, with inflation stabilising around 4% in 2018–2019.

Economic expansion continues as it gains traction on a slow but sustainable trajectory around the potential level. Retail sales and consumer lending are gaining pace as real wage growth accelerates. The October slowdown in industrial production was short-lived and came mainly as a result of the OPEC+ deal alongside the warm weather factor. Leading indicators suggest continued economic growth in the forthcoming quarters.

The views and recommendations expressed in the Bulletin do not necessarily reflect the official position of the Bank of Russia.