Russian Econ Ministry sees 'significant' potential for further key rate reduction

MOSCOW. Feb 13 (Interfax) - Consumer activity in Russia slowed in January and inflation expectations remained flat, so there is still "significant" potential for further key rate reduction, the Economic Development Ministry said in a statement.

"We welcome the Bank of Russia's decision. It is important to note that the monthly data published today by Rosstat are materially lower than the weekly figures due to the wider range of goods and services monitored," Lev Denisov, director of the ministry's Macroeconomic Analysis and Forecasting Department, said regarding the Central Bank's decision to lower the key rate to 15.5% from 16.0%.

"The effect of one-off factors like the VAT pass-through to prices in January 2026, as well as the carry-over of fruit and vegetable price increases from December to January, was limited. As a result, January inflation, excluding the one-off factors, was close to the 2016-2019 average (0.5% MoM), when it was at the Bank of Russia's target," Denisov said.

"Also, according to preliminary data, we see that consumer activity continued to slow in January, while household inflation expectations and observed inflation were unchanged from the previous month. All these factors indicate that significant potential remains for a further key rate reduction," the ministry said.

Consumer price inflation in Russia quickened to 1.62% in January 2026 from 0.32% in December 2025, the State Statistics Service (Rosstat) said on Friday.

Inflation in January 2026 was lower than the 1.96% that analysts predicted in a consensus forecast for Interfax. Also, weekly inflation figures pointed to 2.05% price growth for the month.

Annual inflation, according to the Rosstat data, quickened to 6.00% in January 2026 - the analysts expected 6.35% - from 5.59% at the end of December.

It follows from data for the first nine days of February this year and last that annual inflation in Russia had fallen to 5.93% as of February 9 from 6.00% at the end of January going by weekly dynamics - the Central Bank advocates this method to measure inflation. Annual inflation on February 9 was 0.4 pp below the 6.3% that the Central Bank estimated before the monthly data for January came out.