Russia admits "very negative" inflation tendencies

The increase of annual inflation in Russia has set a new record since the beginning of the year, reaching 6.99%, and during just the first week of October the index of consumer prices has risen by 0.42%.

Source: The Moscow Times with reference to comments of market analysts

"Food prices are rising frontally, the prices of those non-food goods which are sensitive to the exchange rate are also increasing," the analysts of the Loko-Invest investments project state.

Even though the Russian rouble was able to rise from the bottom after the implementation of currency control, the dollar and euro cost almost 40% more than at the beginning of the year – RUB 91.85 and 98.15 correspondingly.

The information concerning the inflation published on the evening of 10 November turned out to be "very negative", analysts of the Russian Alfa-bank admit.

The prices for both food and non-food stuff are rising. Vegetable and fruit aisles of supermarkets, in which the increase of prices by tens of percent has been recorded since the beginning of the year, have become the "inflation trouble" zone.

The statistics by the Federal Statistics Service of Russia and the Ministry of Economic Development of Russia also confirm that the inflation once again started rapidly accelerating in November, as reported by The Moscow Times.

In just a week, from 31 October to 7 November, the food prices index has risen by 0.42% – the same as in the whole month of November 2022.

"And yearly inflation has set a new record since February – 6.99%," The Moscow Times notes.

Analysts of Loko and Alfa-bank unanimously stated that at this rate, the inflation risks to surpass the forecast of the Central Bank of Russia (7-7.5%, by the end of the year). The Central Bank will respond by once again increasing the key interest rate, which has risen twice since the beginning of the year – from 7.5% to 15% per annum.

Background:

• The bank rate has been raised four times within the last three months in Russia.
• Within the course of 2022 inflation in Russia set a new record in the last seven years, having reached 11.94%.

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