February increase in inflation reflects recovering demand and rising costs
February 2021 saw an increase in monthly price growth rates for a wide range of goods and services (seasonally adjusted) on the back of further expansion of consumer demand and continuing cost-driven pressure.
The indicators reflecting stable trends in price dynamics increased. In addition, food price growth was influenced by one-off factors. In particular, a deteriorating epizootic situation materially affected poultry and egg prices. This is communicated in the Bank of Russia information and analytical commentary Consumer Price Dynamics.
Annual growth rates of prices for the basic groups of goods and services, especially food, also accelerated. Annual inflation rose to 5.67%. This points to a higher path of price dynamics in the first quarter of this year compared to the Bank of Russia’s latest published forecast.
Further inflation path will be determined by the timing of the exhaustion of the effect of proinflationary factors and the decline in inflation expectations. Annual inflation slowdown to 4% may be delayed until early 2022. Moving forward, the monetary policy pursued will keep annual inflation close to 4%.