Russia’s inflation breaks 7% in mid-November

Russia’s inflation breaks 7% in mid-November
Russia's economy is growing, but the Central Bank is struggling to contain rising inflation, fuelled by heavy military spending and a very tight labour market. / bne IntelliNews
By bne IntelliNews November 17, 2023

Russia’s annual inflation rate as of November 13 stood at 7.16%, coming close to breaching the Central Bank of Russia (CBR) full-year maximum guidance of 7.5%, according to the latest data from RosStat. In week-on-week terms, as of November 13 the inflation remained elevated at 0.23% w/w. (chart)

As followed by bne IntelliNews in detail, after the ruble fell to RUB100 to the dollar in August, Central Bank of Russia (CBR) Governor Elvia Nabiullina was forced to put through a whopping 350bp rate hike on August 15 to put a floor under the currency’s value.

That was followed by another surprise 200bp rate hike in October – 100bp more than analysts were expecting – as the regulator moved aggressively to rein in the persistent inflation.

In October the CBR was forced to catch up with higher expected inflation for the second meeting in a row. While in September the regulator increased the 2023 annual inflation guidance to 6-7%, after October’s meeting it increased the forecast again to 7-7.5%.

Analysts previously believed that at least one more rate hike is on the cards before the end of this year or the start of next year. However, this week Rosbank noted that seasonally-adjusted inflation in October had moderated, suggesting that while risks in the food segment remain, peak inflation “is probably behind”.

Renaissance Capital also noted that fruit and vegetable products continue to make a significant contribution to the aggregate price growth, while pressure from non-food products slightly decreased and petrol continued to become cheaper.