CBR does not see positive trend in inflation expectations
MOSCOW. Sept 23 (Interfax) - The Central Bank of Russia (CBR) said it still sees inflation risks, including in prices for nonfood goods, which could slightly slow the reduction of inflation.
Annual inflation in Russia slowed to 6.9% in August. This is generally in line with the CBR's forecast of one year ago, as well as the current forecast, which projects that inflation will be 5.5%-5.6% for 2016.
Seasonally adjusted monthly inflation in August slowed somewhat to 0.6% from 0.7% in July, but still remains high, the CBR said in its commentary. Inflation slowed amid a further strengthening of the ruble, weak demand and households' increased propensity to save, as well as slow growth of producer prices in the resource sector, which curbs growth of costs in the economy.
"Fairly high monthly price growth, slow reduction in the rate of growth of prices for nonfood goods and the instability of inflation expectations point to the continued existence of inflation risks," the CBR said.
Food inflation, the acceleration of which in recent months had been due to short-term local factors, slowed considerably in August amid expectations of a record grain harvest in Russia. However, despite a slowdown, price growth for nonfood goods remained high. The CBR attributes this to faster growth of producer prices in some segments of the manufacturing sector and in general to weakening anti-inflation pressure on the demand side.
"Despite the decrease in inflation expectations in August, it seems premature to talk about the formation of a positive trend in their dynamics. The expectations of economic agents remain volatile and dependent on the current situation," the CBR said.
The CBR's continuation of a moderately tight monetary policy will facilitate a further steady slowdown of inflation and help to achieve the inflation target of 4% in 2017, the CBR said.
"If the risks mentioned above are realized, the decrease of inflation could slow slightly, but their impact on the horizon of achieving the targets, by the Bank of Russia's estimates, will not be significant," the CBR said.
