Central Bank of Russia expects annual inflation to drop to 8.5% by end of Sept

MOSCOW. Aug 6 (Interfax) - The Central Bank of Russia expects annual inflation to fall to 8.5% by the end of the third quarter to 8.5%, the regulator said in a commentary to the medium-term macroeconomic review.

Annual inflation was 9.4% in the second quarter, below the Central Bank's April forecast of 10.1%.

The Central Bank said current price growth in the second quarter, as in the first quarter, continued to slow actively from its peak at the end of 2024 under the influence of tight monetary policy, and the seasonally adjusted annual rate (SAAR) of inflation was 4.8%.

The Central Bank in July lowered its inflation forecast for 2025 to 6%-7% from 7%-8%. The middle of this range corresponds to a SAAR of 8.5% in Q3 2025.

"The acceleration [of the SAAR in Q3 compared to Q2] is due to the significant indexation of utility tariffs in July. By the end of 2025, the current SAAR will decrease to 4%," the Central Bank said.

The Central Bank's baseline forecast assumes that, given the current monetary policy and the economy's return to a balanced growth trajectory, annual inflation will return to the target level of 4% in 2026 and subsequently stabilize at it.