One headache for the central bank is Russia's widening budget deficit, caused by reduced energy revenues and soaring expenditure, which stood at almost $25 billion in January alone, as sanctions and the cost of Moscow's military campaign in Ukraine choke the economy's prospects. Annual inflation for 2022 was 11.9%. Economy Minister Maxim Reshetnikov has said he expects inflation to fall substantially by the end of the first quarter, with the second quarter figure below the 4% target. (Reporting by Alexander Marrow and Darya Korsunskaya; Editing by Barbara Lewis)
MOSCOW, Feb 8 (Reuters) - Russia recorded a rise in
weekly consumer prices, extending the previous week's gain, data
from statistics service Rosstat showed on Wednesday, cementing
expectations the central bank will give a hawkish signal as it
holds rates on Friday.
The consumer price index rose 0.26% in the week to Feb. 6,
the Rosstat federal statistics service said, up from a 0.21%
rise a week earlier. So far this year, prices are up 1%.
The central bank is widely expected to hold its key interest
rate at 7.5% on Friday, but to imply future rate increases could
be necessary as inflationary risks become more pronounced.
It aims to return inflation to its 4% target by 2024 and has
forecast inflation will fall to between 5% and 7% this year.
"The regulator has consistently talked about the prevalence
of proinflationary risks and, probably, will note them this time
too," said Alfa Capital portfolio manager Evgeny Zhornist.
"However...there is no reason to move to an increase in the
key rate," he added, explaining that the risks were similar to
those seen when the Bank of Russia last met in December.
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