In August 2017, Russia's inflation levels declined by 3.3% year-over-year. This was well below a 3.9% rise in July and lower than market expectations of 3.7%. It is the smallest inflation rate since at least 1991, mainly due to a slowdown in cost of food and transport, and inflation stayed below the central bank's 4% target for the second month.
When broken down, prices rose at a slower pace for food and non-alcoholic beverages (2.3 percent from 3.8 percent in July); transport (4.2 percent from 4.3 percent); clothing and footwear (4.7 percent from 4.9 percent); furnishings and household equipment (1.9 percent from 2 percent); alcoholic beverages and tobacco (5.3 percent from 5.7 percent) and miscellaneous goods and services (2.9 percent from 3.52 percent). On the other hand, inflation was steady for hotels and restaurants (3.1 percent) and rose for housing and utilities (4.5 percent from 4.4 percent).
William Jackson, senior emerging markets economist at Capital Economics, stated in a note to his clients that: "Against this backdrop, we remain confident with our forecast that the central bank will cut the policy interest rate to 8.0% by the end of this year and to 6.0% by end-2018, from 9.0% now," Jackson added. "This is more easing than the markets are currently pricing in."
Inflation is an interesting sign of a nation's economy, as so long as it remains relatively low, this is a healthy sign. As you can see, Russia's inflation level has been all over the place in the past ten years, and while this is not a detrimental sign, but it is fascinating to see Russia's rate of inflation become more and more manageable over the past year. Interesting...indeed.
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