VAT, tariff indexation to influence prices in Russia significantly in coming months, effect yet to be estimated - Nabiullina

MOSCOW. Dec 19 (Interfax) - The increase in the VAT rate and tariff indexation will have a significant impact on prices in the coming months, which remains to be assessed, Central Bank of Russia Governor Elvira Nabiullina said.

"Inflation has been slowing down. In November, this deceleration was even slightly faster than we expected, which was associated not only with persistent, but also, to a great extent, one-off factors. That said, in the coming months, prices will be considerably affected by the VAT rise and the increase in administered prices. The resulting impact is yet to be estimated," she said at a press conference following a meeting of the CBR board of directors, where the key rate was lowered 50 basis points to 16% per annum.

"We take all of the above factors into account when determining the pace and scale of the key rate reduction," Nabiullina said.

In addition, inflation will temporarily accelerate in early 2026 due to the VAT increase. "In December, certain companies have already started to adjust their prices considering this factor, although its main effect is yet to materialize," she said.

By contrast, some companies are seeking to sell out their stocks faster at the end of the year, ahead of the VAT rise, offering customers attractive prices, which might have a temporary disinflationary effect.