(Reuters) – Inflation in Russia accelerated in June, data from the state statistics service Rosstat showed on Wednesday, a little over a week before the central bank is expected to hike interest rates for the first time in more than a year.
After an emergency hike to 20% shortly after Russia invaded Ukraine in February 2022, the central bank steadily lowered rates to 7.5%, where it has held them since September.
But the Bank of Russia has become ever more hawkish since then and analysts polled by Reuters expect it to hike rates to as high as 8% on July 21, amid increased inflationary pressure due to a weaker rouble, labour shortages and high lending.
In June, annual inflation stood at 3.25% year-on-year, up from 2.51% a month earlier, the data showed. Analysts polled by Reuters had expected inflation at 3.3%.
On a monthly basis, the consumer price index (CPI) rose 0.37% in June after a 0.31% increase in May, the data showed, coming almost in line with analysts’ expectations of a 0.4% increase.
Separate Rosstat data released on Wednesday showed weekly consumer prices rose in early July.
In a different set of data published on Wednesday, the Economy Ministry said inflation was running at 3.59% on an annual basis, up from 3.35% a week ago.
Double-digit annual inflation hit Russia last year soon after it sent its armed forces into Ukraine on Feb. 24, 2022, a move that prompted sweeping Western sanctions.
Annual inflation in Russia has dropped below the central bank’s 4% target in recent months due to that high base effect, but is now climbing once more.
The central bank sees inflation ending this year at 4.5%-6.5% and is determined to bring the rate of price rises back to its 4% target in 2024.
Russian households regularly cite inflation as a key concern, with many having no savings after a decade of economic crises, while rising prices dragged living standards down across the country.
Rosstat gave the following details:
RUSSIAN CPI June 23 May 23 June 22
Mth/mth pct change +0.37 +0.31 -0.35
– food -0.01 -0.31 -1.10
– non-food +0.42 +0.34 -0.41
– services +0.83 +1.13 +0.88
Y/Y pct change +3.25 +2.51 +15.90
Core CPI y/y pct change +2.44 +2.12 +19.18
(Reporting by Darya Korsunskaya and Alexander Marrow; Editing by Gareth Jones and Angus MacSwan)
