One-time pro-inflationary factors will be exhausted at start of 2026, will not prevent decline in expectations - Central Bank of Russia deputy governor

KAZAN. Feb 17 (Interfax) - The one-time pro-inflationary factors that materialized in January will be exhausted at the beginning of 2026, and they will not have secondary effects in terms of impacting inflation expectations, Central Bank of Russia Deputy Governor Alexei Zabotkin told journalists.

"The baseline forecast assumes that the one-time factors that materialized in January will be mostly exhausted at the very beginning of the year, and that they will not give rise to secondary effects, meaning they will not prevent a further decline in inflation expectations," Zabotkin said on the sidelines of the Bank of Russia Macroeconomic Workshop 2026 conference.

In January, factors such as the increase in VAT, tariffs and fees, as well as the shift of price growth for fruit and vegetable products from December to January, had a significant impact on the dynamics of inflation.

According to Rosstat data, inflation in January amounted to 1.62%. It turned out to be significantly lower than analysts' expectations (1.96%) and the weekly dynamics (which indicated price growth in January of 2.05%).

The CBR decided to reduce the key rate by 50 basis points to 15.5% on Friday. Simultaneously with this decision, the Central Bank published an updated macro forecast. The inflation forecast for the current year was raised from 4%-5% to 4.5%-5.5%.

The Central Bank did not have complete data on inflation for January at the time of the rate decision, Zabotkin said. This information would not have affected the annual inflation forecast in any case, he said.

"We did not have the complete data for January by the morning of Friday. We receive data simultaneously with all market participants and the public. It is known that monthly data does not always coincide with what emerges from weekly data, and discrepancies can be quite significant. Naturally, we take this into account when forming the forecast as well. So, to say that if we had known this data [complete for January], the inflation forecast for 2026 would have been somehow different - no, that is not the case," he said.

The latest rate decision was based on a number of factors, he said. "We see more moderate rates of demand growth, and probably in the first quarter of this year they are even more moderate than they were in the fourth quarter, but there are still positive dynamics for most indicators. Most importantly, this is a gradual but fairly confident slowdown in the rate of price growth, including underlying inflation. This, in fact, is what allows us to continue reducing the rate, albeit in very measured and smooth steps," Zabotkin said.