BOFIT Viikkokatsaus / BOFIT Weekly Review 2016/23
Food prices have been the strong mover in consumer prices in recent years. The fall of the ruble at the end of 2014 and Russia’s countersanctions in August 2014 that brought import bans of certain foods, sent food prices to a level 19 % higher on average in 2015 than in 2014. This year, food prices have risen considerably slower in on-year terms than prices of other consumer goods and services. Part of this reflects an increase in domestic food production and a partial shift of demand from imported food items to cheaper domestic products. Food prices were up 5.6 % y-o-y in May, while prices of services and non-food goods were up 8.4 % y-o-y.
Consumer price inflation in recent months has been 3.7 percentage points lower than the CBR’s key rate (at 11 % since August 2015), making the key rate clearly positive in real terms. Central Bank of Russia forecast has consumer prices up 6–7 % y-o-y at the end of this year, and the Bank expects to reach the 4 % inflation target by the end of 2017.