Central Bank expects annual inflation in Russia to slow to 7.8% in Q3, return to target at end-2025

MOSCOW. Aug 7 (Interfax) - Annual inflation in Russia will slow to 7.8% by the end of Q3 from 8.6% at the end of Q2 2024, the Central Bank said in a commentary to its medium-term macroeconomic forecast.

The figure will be not far from the 7.7% seen at the end of Q1.

"According to the Bank of Russia's forecast, current inflation will slow in Q3 2024, under the influence of tight monetary conditions. In Q4 and beyond, as the household savings activity grows and economic activity slows, the upward pressure on prices will continue to decline," the Central Bank said.

It said returning inflation to its target would take a little longer than anticipated but would be accomplished by the end of 2025.

The Central Bank has substantially raised its inflation forecast to 6.5%-7% for 2024 from the previous expectation of 4.3%-4.8%, the regulator said following the meeting of the board of directors on July 26. Expectations were revised due to more significant inflationary pressure amid active growth in domestic demand, outpacing the ability to increase supply of goods and services.

"The measures being taken by the Bank of Russia will rein in price growth: the pace of price growth will slow in the second half of 2024 compared to the first, and inflation will fall to 4-4.5% in 2025 and will remain close to 4% in the going forward," the Central Bank said.

The regulator in April predicted inflation in Russia at 4%.