Russian consumer price growth cooled as central bank turned hawkish

Russian consumer price growth cooled as central bank turned hawkish

MOSCOW (Reuters) – Consumer prices in Russia rose at a slightly slower pace over the last week, data from the state statistics service Rosstat showed on Wednesday, although the central bank remains on watch to raise interest rates to cool inflation.

Prices rose 0.18% in the week to Feb. 13, Rosstat said, down from an increase of 0.26% in the previous week. Since the start of the year, prices have risen 1.24%, a slower pace than in the same period of 2022, Rosstat said.

Russias central bank signalled last week that it is preparing to hike interest rates from their current level of 7.5% to counter stubborn inflationary pressures.

Central Bank Governor Elvira Nabiullina said on Friday that inflationary trends had accelerated across the Russian economy. She flagged the governments widening budget deficit, which came in at $25 billion in January, as a possible concern, saying faster government spending would increase inflation.

Analysts at SberCIB Investment Research on Wednesday raised their forecast for the central banks key rate this year to 8.5% and said it sees the first hike happening in April.

Russian households regularly cite inflation as their main concern, with the majority having no savings, after a decade of economic crises and rising prices dragged living standards down across the country.

Russia‘s annual inflation rate in 2022 was 11.9%, almost three times the government’s official 4% target. The central bank forecasts inflation will be 5-7% this year, falling to 4% in 2024.

(Reporting by Darya Korsunskaya; Writing by Jake Cordell; Editing by Sharon Singleton)