Retail

Russian Weekly Consumer Prices Edge Up As Central Bank Rate Decision Looms

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Weekly consumer prices in Russia rose marginally for the fifth week running, data published on Wednesday showed, two days before the central bank is expected to end its rate-cutting cycle and hold its key rate at 7.5%.

The central bank cut its key rate six times this year after an emergency hike to 20% in February when Russia's decision to send tens of thousands of troops into Ukraine caused inflation to spike. Last month the bank cut rates to 7.5%.

Russia's consumer price index rose 0.08% in the week to 24 October, the Rosstat federal statistics service said. Price increases sped up from a marginal 0.02% rise in the previous week.

The central bank targets inflation at 4% and closely watches data, especially in the run-up to board meetings. Households' inflationary expectations rose again in October to 12.8%, data showed on Tuesday.

'We believe that the publication of survey results should not noticeably shift the central bank's mood in a more hawkish direction,' said Raiffeisen Bank analysts. 'The regulator will likely keep the key rate at 7.5%.'

Inflation Slowdown

A majority of analysts polled by Reuters on Monday expected a hold, as an inflation slowdown becomes less marked and geopolitical uncertainty saps consumer demand.

Falling living standards have lowered consumer demand, hitting retail sales and leading to an extended period of deflation over the summer. President Vladimir Putin's military mobilisation drive threatens to undermine productivity, demand and economic recovery, analysts have said.

High inflation has for years been a 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.

Since the start of the year, consumer prices have risen 10.64%, Rosstat said. At the same point in 2021, year-to-date inflation was running at 6.49%.

News by Reuters, edited by ESM. For more retail news, click here. Click subscribe to sign up to ESM: European Supermarket Magazine.

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