The Bank of Russia reported an acceleration in price growth

“In October, most indicators of sustainable price growth increased compared to the previous month,” the Central Bank of the Russian Federation reported. At the same time, in general, monthly price growth slowed down compared to September, but only due to a decrease in the cost of tourism and transport services.

With seasonal adjustment, price growth, according to the Central Bank, without volatile components amounted to 11.7% (10% in September). The underlying consumer price index excluding tourism services reached 13.5% (9.6% in September).

Demand growth again exceeded the ability to increase production of goods and services and inflationary pressure persisted, the Central Bank of the Russian Federation said.

According to the Bank of Russia, in October year-on-year food inflation amounted to 9% and, excluding fruit and vegetable products, 8.37%. The cost of fruits and vegetables increased by 13.51%. Also in October, compared to September, food prices increased by 1.23% and those of foods without fruits and vegetables, by 1.2%. On the other hand, the prices of fruits and vegetables increased by 1.44%.

Overall, consumer prices increased by 0.75% in October and 0.48% in September.

The Central Bank of the Russian Federation recalled the goal of reducing annual inflation to 4%, and this requires a tough monetary policy. In 2024, inflation is expected to be 8-8.5%.

“Greater rigidity of monetary conditions is required, capable of guaranteeing more restricted growth in demand to resume the disinflation process, reduce inflation expectations and create the conditions for a sustainable decline in inflation in 2025,” said the bank.

On October 25, the Bank of Russia raised the interest rate to a record high of 21% and allowed for further growth.