Get into the top five: analysts predicted inflation at the end of the year

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Inflation in Russia at the end of 2021 will be 4.85%, according to the results of the Izvestia consensus survey… The restraining factor for the rise in prices will be an increase in the key rate of the Central Bank and a return to a neutral monetary policy, analysts agreed. Also, the increase in the cost of goods and services will be affected by the ruble exchange rate. In the event of a sharp decline, imported goods will rise in price, which will negatively affect inflation.

Tough politics

Most of the analysts interviewed by Izvestia agreed that by December 2021, the rise in prices in Russia will be about 5%. The maximum forecast is given by VTB experts – the cost of goods and services may increase within 5.3%. Otkrytie has the lowest expectations. Bank analysts admit that the rise in prices may be only 4.3%

According to the senior economist of Otkrytie, Maxim Petronevich, inflation dynamics will largely be determined by the level of external food prices in dollar terms… Chances are good that their increase will soon stop.

– In this case in the summer we will be able to observe a sharp deceleration in price growth, provided that the ruble remains close to the observed levels, – says the economist.

The rate of the Russian currency is now hovering around 75 rubles per dollar and 90 per euro. In the event of a fall in the national currency, imported goods will rise in price.

Andrey Kadulin, Head of the Analytical Department of Bank Saint Petersburg, agrees with him. According to him, the slowdown in inflation will be facilitated by the measures of the Central Bank on monetary policy… In particular, a gradual increase in the key rate. The regulator began to increase the figure in 2021. The first step is 0.25 p.p. was made in March, the second – an increase of 0.5 p.p. – in April. The next decision on the rate will be made by the Board of Directors of the Central Bank on June 11. Now it is 5%.


Photo: Izvestia / Kristina Kormilitsyna

Also recovery of consumer activity will play in favor of accelerating inflation, says the head of the analytical department of Bank Zenit Vladimir Evstifeev.

This is happening against the backdrop of a rather soft budgetary policy, which also increases the income of the population. Low interest rates in the economy and the preferential mortgage program lead to high rates of lending… The investment activity of the business is also increasing, both against the background of low interest rates and due to the effect of the demand deferred from 2020, the expert stated.

The peak of growth in consumer prices will come in June, when inflation will accelerate to 6%, said Mikhail Vasilyev, chief analyst at Sovcombank. The cost of goods and services will return to the target 4% only in the middle of 2022.

Rising prices for food and raw materials on world exchanges, interruptions in supply chains due to the pandemic, as well as the prolonged effect of the transfer of the weakening of the ruble in 2020 to prices are in favor of maintaining high inflation.… In addition, a gradual lifting of quarantine restrictions is expected in the coming months, which will lead to an increase in business activity. The implementation of deferred demand amid recovery in economic activity will also push prices up, he explained.

Global influence

The regulator predicts inflation at the end of this year at 4.7-5.2%. Rapid recovery in demand and heightened inflationary pressures are driving the need for an early return to monetary neutralitye, stated the Bank of Russia in its latest release at the key rate. The Central Bank also noted that inflationary expectations of the population remain at an elevated level.

The inflation forecast for 2021 from the Ministry of Economic Development is more optimistic. In its updated version, the department indicated that prices will grow by only 4.3%, and in the next three years they will return to the target of 4%… The acceleration of inflation around the world, according to the ministry, was influenced by the soft monetary policies of the central banks of various countries, the unfavorable situation with the harvest in the world and the increase in purchases by a number of large importers.


Photo: RIA Novosti / Mikhail Voskresensky

Mikhail Vasiliev of Sovcombank and Stanislav Duzhinsky, an analyst at Home Credit Bank, agree with the assertion that the Russian indicator of price growth is influenced by global inflation.

The inflationary effect may arise against the background of the dynamics of world food prices. According to our estimates, by the end of this year the dynamics of the consumer price index in annual terms will be higher than the target of the Bank of Russia… In December 2021, prices may increase by about 5%. The return to the target of the Central Bank will tentatively occur in the summer of 2022, the analyst said.

Taking into account the growth of the key rate of the Central Bank, the interest on deposits in banks will begin to increase, which will stimulate the population to save rather than spend… The cost of consumer loans will also jump, which will reduce the population’s demand for loans, including mortgage loans. Experts already predict the return of Russians to the traditional instrument of accumulation – a bank deposit.

but a decrease in domestic demand may negatively affect the dynamics of GDP growth. The Ministry of Economic Development expects an increase in the Russian economy by the end of 2021 by 2.9%… The Central Bank is even more optimistic – the growth will amount to 3-4%. However, taking into account last year’s 3% drop, the increase in 2021 can only be called a recovery.