The inflation outlook for Russia has changed considerably compared to a few months ago. This is mainly due to the influx of petrodollars, which partly caused a historic revival of the ruble. Other moves by Moscow to support the currency also contributed to the ruble’s rally, which gained 15 percent in June.
The less eagerness to buy among Russians also means that prices rise less rapidly. Because of the uncertainties, Russians think twice before making a major purchase. The extent to which Russians are currently pulling the wallet is equal to the low point in the corona crisis.
Prices have risen sharply in the past due to the sanctions imposed against Russia. This disrupted trade flows and led to shortages of certain products.
As inflation has slowed, Russia’s central bank has cut interest rates in four steps to pre-invasion levels. The expectation for inflation this year has also been revised downwards. Policymakers expect inflation to be between 14 and 17 percent by the end of this year. According to experts, the Russian economy will shrink by no more than 3.5 percent this year.