Russian inflation at 8%

RUSSIA / FSU POLITICS - In Brief 05 Nov 2021 by Alex Teddy
The Russian Statistic Agency (Rosstat) published data on November 3 showing that inflation is the highest since 2016. The Russian Central Bank (CBR) has tried in vain to stem inflation. Price rises are hampering the economic recovery.The inflation rate is even worse than forecast, which was 7.4%. The target is 4%.The globe is contending with stagflation: stagnation and inflation as it did in the 1970s. The USA is also struggling with inflation.The Governor of CBR has been warning for months that prices rises are harming the economy. She said that high inflation might be here for a long time.Food prices in particular are rising in Russia. They have risen 12% in 2021. Some basic foodstuffs such fruit, vegetables and eggs are up 25%. According to a poll, people cite price rises as the biggest problem they face.Russian living standards recovered in Q3 2021 to the best since 2015. But they are still below 2013. Sanctions over Ukraine still bite. Real disposable incomes have never recovered since 2014. The CBR has been raising interest rates for years. The key rate rose to 7.5% in 2021. CBR said it will raise it again and again if need be. There are those who say Russia needs to learn to live with inflation as the new normal. Endless excessive rate hikes do more harm than good, according to one school of thought.The CBR is worried that Russia could be drawn into an inflationary spiral. People's worry about price rises means they panic purchase, thereby increasing prices even more. This will be a vicious cycle. Inflation expectations are even worse than observed inflation.Loko Invest estimates that interest rates will rise to 8.5% in December 2021. Analysts anticipate that in...

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