Russian Q1 inflation below Central Bank's Feb forecast, 7%-8% outlook for year still valid - CBR's Zabotkin

MOSCOW. April 2 (Interfax) - Russian inflation for Q1 is turning out to be below the forecast the Central Bank gave in February, CBR Deputy Governor Alexei Zabotkin said.

"If the whole of March looks the same as the trends we observed week-on-week, then we can even expect overall inflation in the first quarter to be a little below the forecast published by the Bank of Russia on February 14 after the previous pivotal meeting. That means that the growth in prices is already slowing down compared to the very high growth rates of the fourth quarter," he said during a working group meeting at the State Duma.

He told journalists later that the inflation situation was turning out better than the Central Bank's expected for the first quarter of 2025. "Regarding my remark that inflation in the first quarter is below the forecast, we are talking about the inflation estimate for the first quarter, which was given in the comments to the forecast, and not about the range of 7%-8%, which remains the valid forecast for the year as a whole," he said.

The Central Bank in February raised its 2025 inflation forecast to 7%-8% from 4.5%-5.0%. It kept the forecast at 7%-8% following the March meeting of its board of directors.

In its commentary to the forecast following February's pivotal board meeting, the Central Bank said it expected annual inflation to accelerate to 10.6% by the end of Q1 2025 from 9.5% at the end of 2024.

Based on Rosstat data, annual inflation, which was 10.06% at the end of February, inched up to 10.22% as of March 24 from 10.20% on March 17 based on weekly price growth - the Central Bank advocates this method to calculate inflation.

Zabotkin said that prices were still growing faster than the target level of 4%. "We need to keep monetary policy tight if we are to bring inflation back to a low level," he said.

The Central Bank's evaluations of the inflation situation are based principally on monthly, not weekly, data, he said.

"Weekly data are based on a limited basket which does not fully represent service sectors where the recent rate of price growth exceeds overall inflation. Weekly data should be treated as preliminary, operational figures," Zabotkin said.