Russian weekly consumer prices rise marginally as central bank rate decision nears
12:23 pm Wednesday, October 19th, 2022
MOSCOW (Reuters) -Weekly consumer prices in Russia rose marginally for the fourth week running, data published on Wednesday showed, adding weight to analysts’ expectations that the Bank of Russia may decide to end its rate-cutting cycle next week.
The central bank cut its key rate six times this year after an emergency hike to 20% in February as Russia sending tens of thousands of troops into Ukraine, causing inflation to spike. Last month the bank cut rates to 7.5%.
Russia’s consumer price index rose 0.02% in the week to Oct. 17, the Rosstat federal statistics service said. Prior to the current four-week sequence, the last time weekly prices rose was in May.
A separate set of Rosstat data published on Wednesday showed the producer price index, a measure of how much suppliers charge clients, staying at 3.8% on annual terms in September, the same reading as in August.
In other data, the economy ministry said annual consumer inflation slowed to 13.10% as of Oct. 17, down from 13.36% a week earlier.
Falling living standards have weighed on consumer demand, hitting retail sales and leading to an extended period of deflation over the summer. President Vladimir Putin’s military mobilisation drive now threatens to undermine productivity, demand and economic recovery, analysts have said.
But Evgeny Suvorov, economist at CentroCredit Bank, said mobilisation appeared to be having a disinflationary impact on prices for most goods, as people have reduced spending.
“Some went to the front, some left, some are hiding,” Suvorov wrote on his MMI Telegram channel. “If a strengthening of the disinflationary trend becomes evident over the next couple of weeks, then the central bank could again go for a rate cut on Oct. 28.”
In a report on Wednesday, the central bank said the current lending dynamics and budget parameters for 2022-23 would accelerate growth of the money supply, suggesting that inflationary pressure in the economy would increase in the coming quarters.
High inflation has for years been a top concern for Russian households as it dents their spending power and eats into living standards. Poverty rates are relatively high in Russia and surveys show more than half of all households have no savings.
Since the start of the year, consumer prices have risen 10.55%, Rosstat said. At the same point in 2021, year-to-date inflation was running at 6.49%.
(Reporting by Alexander Marrow and Darya Korsunskaya; Editing by Jon Boyle)
