Price pressure in Russia increasing gradually, but price growth remains subdued - Central Bank

MOSCOW. March 21 (Interfax) - Price pressure in Russia is increasing gradually picking up after a period of subdued price growth in the second half of 2022, the Central Bank said in a commentary.

Seasonally adjusted consumer price growth was 0.26% in February and 0.43% in January, while growth before adjustment was 0.46% and 0.84%, respectively. Price growth averaged at 0.35% in January-February and was higher than in Q4 2022, accelerating for nearly all categories of goods and services amid a generally volatile monthly trend.

"Consumer price growth generally accelerated, but its pace remains subdued," the regulator said. Most goods and services are becoming more expensive at rates below the 4% target. Price growth is still constrained by the conservative consumer behavior of households amid general uncertainty, as well as the gradual restoration of import supply chains, which increases the supply of consumer goods, it said.

The regulator also draws attention to gradual growth for the sustainable component of inflation.

Annual inflation in Russia could fall below the 4% target in the coming months due to the high base last spring, the Central Bank forecasts. In H2 2023, when low monthly values of the second half of 2022 come into play, the influence of pro-inflationary factors will increase slightly, it said.

According to the Central Bank's baseline scenario, inflation will be 5%-7% in 2023, will return to the 4% target in 2024 and will remain near the target after that.