17 Jun 2022 18:12

CBR sees no risks of deflation, Econ Ministry categorically disagrees: Russia already 'slipping' into it

ST. PETERSBURG. June 17 (Interfax) - The Economic Development Ministry and the Central Bank of Russia (CBR) differ radically in their assessments of the risks of deflation in Russia.

"So far there is no talk of deflation risks. Thus far we have year-on-year price growth of 16.7% and the space to calibrate monetary policy through standard measures, namely through the mechanism of the key rate, so far it remains quite significant," CBR Deputy Governor Alexei Zabotkin said at the business breakfast hosted by Sberbank within the framework of the St. Petersburg International Economic Forum (SPIEF-2022).

The Economic Development Ministry categorically disagrees with the current estimate, minister Maxim Reshetnikov said. "Colleagues, we have deflation for the fifth week in a row, and we shouldn't measure inflation year on year. Let's take the monthly data, May inflation, calculated in annual terms - we're looking at a 1.6% inflation rate," the minister said, pointing to the latest weekly data on deflation.

"We are really slipping into a deflationary spiral, and we need to take this seriously. We expect that going forward together with the Central Bank we will make an analysis, and the trend which our colleagues have set will last and as fast as possible, because without cheap loans we may not make it out," Reshetnikov said.

Alexei Mordashov, head of the Severstal board, who also spoke at the Sberbank breakfast, joined ranks with the Minister of Economic Development. He said he has always supported a cautious monetary policy, but now it's time to "abandon dogma." "We shouldn't be afraid of inflation - we're already looking at deflation!" the businessman said.