Current seasonally adjusted inflation in Russia in March will not exceed the Feb level - Zabotkin

MOSCOW. March 25 (Interfax) - Current seasonally adjusted inflation in Russia in annual terms in March will be level with or even lower than the 8% seen in February, Central Bank Deputy Governor Alexei Zabotkin said in the State Duma.

"Inflation is already declining, if you look at the current month-to-month price growth. In November-December it was about 14%. Not annual growth, but if you take the month, adjust it for seasonal factors and see what happens if such inflation continues for 12 months. In November-December, the current rate of price growth was 14%, which is a lot. This was the peak. In January, current inflation was already less than 11%, in February less than 8%," Zabotkin said.

"In March, it will most likely be at the February level or even slightly lower," he said.

He said that the Central Bank still intends to enter 2026 with a current inflation rate of 4%, meaning that the current rate of price growth will be 4% by the end of 2025, with annual inflation at 4% at the end of next year. There will be a more significant growth in the consumer price index in 2025 due to more substantial growth now, in the first and second quarters.

"It is also important to underline that we shouldn't expect inflation to decrease by itself or purely due to the strengthening of the ruble, as we sometimes hear. To achieve a low inflation rate, it's absolute vital to slow down the growth of the money supply, more so than over the last three years, and in doing so slow down the growth of demand," the deputy governor of the Central Bank said.

"The money supply has two principal sources - loans and the budget. Therefore, in order to see price growth slow down, we need to ensure more moderate growth in lending and the return of fiscal rules for the budget. I would also like to underline that nobody doubts that lending will continue to grow, but that should happen at a more moderate rate than what we had in 2023 and 2024," Zabotkin said.

Inflation in Russia was at 0.06% from March 11 to March 17, 0.11% from March 4 to March 10 and 0.15% from February 25 to March 3, Rosstat reported. Price growth from the start of the month to March 17 was at 0.23%, compared with 2.28% from the start of the year.

Inflation in annual terms, based on Rosstat data, accelerated slightly as of March 17 to 10.20% from 10.19% on March 10 (10.06% at the end of February), going by weekly figures, which is the methodology followed by the Central Bank. It slowed to 10.08% on March 17 from 10.11% on March 10, based on average daily data for March 2024 - this methodology is favored by the Russian Economic Development Ministry. The discrepancies are related to the fact that in March 2024 the dynamic was uneven - in the first half of the month, price growth was low, but in the second half it accelerated.