Central Bank of Russia raises 2026 inflation forecast to 4.5%-5.5%
MOSCOW. Feb 13 (Interfax) - The Central Bank of Russia has raised its inflation forecast for 2026 from 4%-5% to 4.5%-5.5%, according to a press release issued by the regulator following the meeting of its board of directors on the key rate.
The forecast has been raised taking into account the shift of price increases from the end of last year to the beginning of this year, the Central Bank said.
Underlying inflation, according to the CBR's forecast, will settle near 4% in H2 2026. Annual inflation will be at the target level in 2027 and beyond.
Current price growth in Q4 2025, adjusted for seasonality, slowed on average to 3.9% on an annualized basis after 6.5% in Q3. A similar indicator of core inflation averaged 4.7% after 4.1% in the previous quarter. The majority of sustained inflation indicators on an annualized basis in recent months remained in the range of 4%-5%. Annual inflation, as estimated on February 9, stood at 6.3%.
According to the CBR, very low price growth rates were observed for a number of goods at the end of 2025, primarily fruit and vegetables. Taking this into account, and the absence of a significant pass-through of the VAT increase into prices in December, inflation for the whole of 2025 turned out to be below the Central Bank's October forecast and amounted to 5.6%. However, at the beginning of 2026, the impact of these factors on price dynamics became the opposite, the CBR said. The increase in VAT, excise duties, indexation of regulated prices and tariffs, and the correction of prices for fruit and vegetables led to a temporary but significant acceleration of current price growth in January.
In this way, there was some redistribution of inflation between 2025 and 2026. However, the overall cumulative price increase from November to January is in line with the Central Bank's expectations.
Inflation expectations remain at an elevated level, which may hinder a sustained slowdown in inflation, the CBR said.
Pro-inflationary risks still prevail over disinflationary ones in the medium-term, it said. The regulator associates the main pro-inflationary risks with a more prolonged upward deviation of the Russian economy from the balanced growth path and high inflation expectations, effects from the increase in VAT and regulated prices, as well as with a deterioration in foreign trade conditions. A slowdown in global economic growth in the event of increased trade tensions and low oil prices could have pro-inflationary effects through the dynamics of the ruble exchange rate.
Geopolitical tensions remains a significant factor of uncertainty, the Central Bank said. Disinflationary risks are associated with a more significant slowdown in domestic demand.
