Decline in inflation expectations in Russia may occur more slowly due to rising gasoline prices, VAT increase - CBR deputy governor

MOSCOW. Oct 3 (Interfax) - A decline in inflation expectations may occur more slowly due to rising gasoline prices and the upcoming increase in the VAT rate, Central Bank of Russia Deputy Governor Alexei Zabotkin said.

"After all, household and business inflation expectations are formed under the influence of not only marker goods, but also the general assessment of the price growth situation. And after all, the current rate of price growth today is significantly lower than it was, say, in the fourth quarter of last year. Accordingly, we still proceed from the assumption that the decline in inflation expectations from those high levels, from the ranges observed in 2023-2024, will occur as the current price growth stabilizes at a lower level and continues to decrease towards our target. But you are absolutely right, this process may occur more slowly," Zabotkin said during a broadcast on RBC radio.

According to Zabotkin's assessment, the planned increase in the VAT rate from 20% to 22% could contribute 0.6-0.7 percentage points to inflation at the end of 2025 and the beginning of 2026.