Russian inflation exceeded 10 percent for the first time in more than five years, spurred by sanctions and the worst ruble collapse since 1998.
Consumer prices increased 10.4 percent this year through Monday, the Russian Federal Statistics Service in Moscow said yesterday in an e-mailed statement. Prices grew 0.9 percent in the week through that date, the most since April 2008, when the service started to provide weekly data.
The rout of the ruble, the world’s worst-performing currency in the past three months, is raising the price of imported goods. Price growth, compounded by the effect of a ban on imports of some foods imposed by Russian President Vladimir Putin in retaliation for sanctions the US and its allies enacted over Russia’s policy in Ukraine, has raced past a revised central bank forecast of 10.1 percent.
Accelerating inflation is logical, according to Dmitry Polevoy, chief economist for Russia and the Commonwealth of Independent States at ING Groep NV in Moscow.
Companies are saying: “Everybody is raising prices and so will I, especially when people start panic-buying not only electronics and cars, but also everyday goods,” he said by e-mail.
Annual consumer-price growth has also reached 10.4 percent from a year earlier, in reaction to the exchange rate, devaluation and inflation expectations, Polevoy said.
Inflation might reach 11.5 percent next quarter before it begins to decelerate, according to a Bank of Russia forecast published last week. Policymakers postponed their 4 percent target to the end of 2017, after failing to meet the goal for more than two years.
Consumer spending might contract 6.3 percent to 6.5 percent next year, while fixed-capital investment will probably shrink 10.1 percent to 10.3 percent, according to the central bank’s stress scenario.
“That’s clearly negative for the economy, as accelerating inflation will strongly undermine consumer demand in the first quarter,” Vladimir Osakovskiy, the chief economist for Russia at Bank of America Corp in Moscow, said in an e-mailed note.
“Policy and market implications will be limited, as it is already fully priced in by the massive 650 basis points hike last week,” Osakovskiy added.
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