According to the Bank of Russia’s Research and Forecasting Department’s bulletin Talking Trends published on June 5, 2018, inflation in the country remains low. At the same time, the gap between the inflation rate’s stable components and the Bank of Russia’s target has shrunk recently. The Bank of Russia’s policy fosters reduced inflation risks and inflation anchoring at a level close to four percent.

Inflation in April stabilized at 2.4 percent; it is likely to accelerate somewhat in May, on the back of temporary factors associated with the weakening of the ruble and an increased gasoline price. That said, a series of analytical indicators describing the stable component of consumer price growth point to an increase in overall inflationary pressure in the economy. Short-term inflation risks rose relative to the start of the year on the back of the ongoing increase in wages (which is above productivity growth rates) and growth in motor fuel prices amid mounting global oil prices. These factors will combine to bring inflation close to four percent sooner than expected.

Russia’s economic growth rebounded close to the country’s potential level, demonstrating resilience to April’s depreciation of the ruble and the rising uncertainty. Russia’s markets, supported by oil prices, were able to resist the elevated pressure emanating from stronger geopolitical tensions and the overall deteriorating conditions in emerging market countries observed between late April and early May.