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Russian weekly consumer prices rise for second week running

Russian weekly consumer prices rise for second week running By Reuters

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Economy 9 minutes ago (Oct 05, 2022 17:23)

© Reuters. FILE PHOTO: A woman counts money at a food fair in the village of Ulyanovka, south-east of Stavropol, Russia December 22, 2015. REUTERS/Eduard Korniyenko/File Photo

MOSCOW (Reuters) – Weekly consumer prices in Russia rose for the second week running, data published on Wednesday showed, after nearly three months of weekly deflation and as the central bank appears to have finished its interest rate-cutting cycle at 7.5%.

Russia’s consumer price index rose 0.07% in the week to Oct. 3, the Rosstat federal statistics service said. Before last week’s 0.08% rise, the last time weekly prices had risen was in May.

Annual inflation slowed to 13.49% as of Oct. 3 from 13.71% a week earlier, the economy ministry said.

Sanctions pressure on Russia is particularly high after it declared annexations after holding what it called referendums in occupied areas of Ukraine. Western governments and Kyiv said the votes breached international law and were coercive and non-representative.

The Bank of Russia cut its key rate to 7.5% last month, but suggested its rate-cutting drive could end soon, omitting guidance about studying the need for future reductions, as inflationary expectations rise.

Inflation surged earlier this year after Moscow launched what it calls its “special military operation” in Ukraine, prompting the central bank to hike rates to 20% in February in a bid to slow the pace of rising prices.

The bank has cut rates six times since then, but falling living standards in recent months have weighed on consumer demand, hitting retail sales and leading to an extended period of deflation over the summer.

High inflation has for years been a top concern for Russian households as it dents their spending power and eats into living standards. Poverty rates are relatively high in Russia and surveys show more than half of all households have no savings.

The central bank targets annual inflation of 4% and expects to return it to that level in 2024.

Since the start of the year consumer prices have risen 10.40%, Rosstat said. At the same point in 2021, year-to-date inflation was running at 6.49%.

A Reuters poll of economists last week suggested that interest rates will remain unchanged until the end of the year, with annual inflation accelerating to 12.4%.

Russian weekly consumer prices rise for second week running

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