Annual inflation in Russia rose to 5.2% in January 2021. However, monthly growth in consumer prices slowed down compared to December and November levels, but still remains above 4% in annualized terms.
According to the recent information of the Bank of Russia, the main contribution to the slowdown in price dynamics was made by a significant reduction in the growth rate of vegetable prices.
At the same time, the current growth rates of prices for non-food products and services picked up slightly. The underlying reasons include the emerging recovery of the economy and demand, which allowed manufacturers and retailers to partially transfer into prices the increase in costs that occurred last year. It was in part associated with a weaker ruble, an increase in world prices for agricultural raw materials, and anti-epidemic requirements.
The Bank of Russia forecasts that annual inflation will peak in February-March, after which it will begin to gradually decline. The decline path will be determined by the timing of the exhaustion of the effect of proinflationary factors, as well as by the base effects of 2020. Given the pursued monetary policy, annual inflation will come in at 3.7-4.2% in 2021 and will stay close to 4% further on.
