Russian Central Bank Expected To Hike Rate As Inflation Surges

Russia’s inflation, in November, is climbing to 8.4%, touching its highest reading in about six years according to the Rosstat national statistics service’s statements on Wednesday.

Prices have risen over the last 18 months as the economy emerges from the coronavirus slowdown, and Russia’s Central Bank has hiked interest rates aggressively to kill-off what governor Elvira Nabiullina fears could turn into a vicious inflationary cycle, so another rate hike is expected soon.

Inflation is now running at well over double the Central Bank’s official target of 4%, rising from a reading of 8.1% in October to its highest level since January 2016.

Surging food prices have been behind rising headline inflation, with fruit and vegetable prices up almost 20% over the last year, Rosstat said; a driver of deep political and economic discontent in a country where living standards are around 10% lower than they were in 2013.

The latest figures showed signs that food inflation may be slowing down, only for services prices to have started rising faster.

Short-term price decreases as Russia entered a partial lockdown at the start of November provides some optimism, but the reading of 8.4% has once again surpassed expectations.