© Reuters. FILE PHOTO: Russian banknotes of 100 rubles are placed at the checkout counter of a supermarket in the Siberian town of Tara in Russia’s Omsk region on December 14, 2021. Photo taken on December 14, 2021. Reuters/Alexey Malgavko
MOSCOW (Reuters) – Russian consumer prices fell 0.17% in the week to July 15, data showed on Wednesday, after falling 0.03% in the previous week, opening the door for Russia’s central bank to consider cutting interest rates as early as this week.
A stronger ruble and falling consumer demand have helped Russia rein in inflation, which soared to a 20-year high on an annual basis after Moscow sent tens of thousands of soldiers to Ukraine on February 24.
Consumer prices have risen by 11.41% so far this year, compared with 4.51% in the same period in 2021, according to the Federal Statistical Office Rosstat. Prices of almost everything from vegetables and sugar to clothes and smartphones have risen sharply since February 24.
In a separate set of data, the economy ministry said annual consumer inflation slowed to 15.39% as of July 15, down from 15.62% a week earlier.
Meanwhile, data on Wednesday showed that Russian households’ inflation expectations fell to 10.8% in July from 12.4% in June, the lowest level since March 2021.
The central bank, which has set an annual inflation target of 4 percent, is widely expected to cut its key interest rate by at least 50 basis points from 9.5 percent at a board meeting on Friday to limit the depth of the economic contraction by reducing lending.
Evgeny Suvorov, economist at CentroCreditBank, said the inflation expectations data raised the odds that the central bank would opt for a larger 100 basis point rate cut on Friday.
High inflation has been a major concern for Russian households for years as it reduces living standards, and this year’s economic crisis triggered by unprecedented Western sanctions on Russia will exacerbate that.