The Central Bank predicted continued price growth

Annual inflation, which in May exceeded 6% for the first time in five years, will return to the target 4% only in the second half of next year, the Central Bank believes.

The current acceleration of inflation indicates the formation of a steady pressure on prices due to the fact that the increase in demand outstrips the possibility of expanding supply and it is easier for enterprises to transfer the increase in costs to selling prices, the report of the Central Bank says. “Given the decisions already made to raise the key rate, as well as the monetary policy pursued in the future, annual inflation will return to the target of the Bank of Russia in the second half of 2022 and will be close to 4% in the future,” the regulator predicts.

The acceleration of annual inflation in May was observed in all regions, according to the report of the Central Bank. Most of all, prices increased in the North-Western Federal District - by 6.85% by May 2020. The most expensive vegetables, building materials, cars, as well as housing and hotel services, follows from the materials of the regulator. The smallest acceleration of annual inflation in May was observed in the North Caucasus Federal District, mainly due to restrained growth in food products.

The highest inflation in May 2021 was observed in the Republic of Kalmykia — 8.12% by May 2020. The top 5 regions also included Khakassia (8.07%), Dagestan (8.06%), Voronezh region (7.46%) and Altai Territory (7.43%). The lowest inflation in May 2021 was recorded in the Altai Republic (4.55%). Tyumen region (4.68%), Kamchatka region (4.69%), Sakhalin (4.75%) and Tomsk (4.92%) regions.

The Central Bank also notes that the monthly increase in prices for non-food products (excluding oil products) in May accelerated to 0.84% ​​for the first time since March 2016. The prices for building materials increased the most (16.44% compared to May 2020), cars (10.38%) and furniture (9.22%).

• Annual inflation in May accelerated to 6.02%, Rosstat reported on June 7 - inflation rose above 6% for the last time in October 2016.
• On June 11, the Bank of Russia raised the key rate by 0.5 percentage points. - up to 5.5% per annum - from June 15. The last time the rate was at this level was in April 2020. What the market was waiting for and what will happen next, we told here .

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Record inflation in the spring of 2021 is not a Russian anomaly, but a global trend that could drag on and change the lives of private investors. Read more in our final newsletter .