9 Jun 2022 11:02

Russian inflation trajectory changed in May, further monetary easing needed to encourage demand - Econ Ministry

MOSCOW. June 9 (Interfax) - Russia's inflation figures for late May and early June show the inflation trajectory has altered following its March-April peaks, the Russian Economic Development Ministry said in an inflation commentary.

"The inflation dynamic of around zero for the past week as well as record low monthly rates for May (0.12% MoM) enable us to conclude that the inflation trajectory had adjusted following the peaks reached in March and April this year," the ministry's press office said.

"At the same time, the restructuring of logistics chains, the situation with the harvest and the external situation will influence the pace of consumer price growth. We continue to monitor these processes closely, and we will give our adjusted estimate as we update the socio-economic development forecast," it said.

"Consumer demand remains low according to the latest data at our disposal, " the ministry said.

It said that by means of support, the government was boosting budget spending and continuing to pursue programs for lending on preferential terms to businesses with state guarantees. "The indexation of the subsistence minimum, minimum wage and pensions by 10% on June 1 will have a positive impact on demand," the ministry said.

"But further and substantial monetary policy easing is needed to overcome this trend and to encourage private sector demand," it said.

The Federal State Statistics Service (Rosstat) said on Wednesday that inflation for May 2022 slowed to 0.12%, the lowest for the month since record began in 1991 - the previous low was 0.27% in May 2020. Inflation was 1.56% in April and 7.61% in March 2022. Annual inflation slowed to 17.10% in May from 17.83% in April 2022 and was the lowest since January 2002.

Russia had deflation of 0.01% in the week May 28-June 3, following zero inflation for May 21-27 and deflation of 0.02% for May 13-20. Annual inflation continued to slow, falling to roughly 17.0% as of June 3