Central Bank of Russia expects annual inflation to accelerate to 10.6% by end-March

MOSCOW. Feb 26 (Interfax) - The Central Bank of Russia expects annual inflation to accelerate to 10.6% by the end of Q1 2025 from 9.5% by the end of 2024, the regulator said in a commentary to the medium-term macroeconomic forecast.

"High inflationary pressure in the stable components of inflation, caused by an ongoing positive output gap and elevated household inflation expectations and business price expectations, were the reasons for the Bank of Russia revising its 2025 inflation forecast," the Central Bank said.

"In the updated baseline forecast, seasonally adjusted current price growth in the first quarter of 2025 will be 10.2% in annual terms. During the year, it is predicted to slow down (except for July, due to the planned indexation of utility bills). The current rate of price growth will fall to the target level of 4% by the end of 2025," the regulator said.

The Central Bank in February raised the inflation forecast to 7%-8% in 2025 from 4.5%-5% previously. The CBR expects in its baseline scenario that given the current monetary policy stance and as the economy returns to a path of balance growth, annual inflation to return to 4% in 2026 and remain on target thereafter.

Annual inflation quickened to 10% as of February 17 from 9.96% on February 10, based on weekly dynamics - the Central Bank advocates this method.