MOSCOW: Russian consumer price inflation may exceed 7.5 percent this year, its central bank governor said on Thursday, the latest admission by policymakers that international tensions over Ukraine are damaging the economy.
The central bank has an inflation target of 5 percent plus or minus 1.5 percentage points for this year, but its latest forecasts make clear the target will be missed.
"Inflation, pressured by external and unpredictable factors, has accelerated significantly," head of the central bank Elvira Nabiullina told a weekly government meeting.
"It's already obvious that based on 2014 results, the 5 percent target cannot be met. Based on our estimates, inflation will come to 7.5 percent and may be even higher."
Inflation is spiking in part because of a ban on many food imports which Russia introduced in retaliation for Western sanctions over Ukraine, the central bank has previously said.
The central bank has three economic development scenarios for the next three years, but may also add another "stress" scenario, which envisages a sharp decline in oil prices.
"The central bank is developing a fourth scenario, a stress scenario, which assumes a sharp, more significant decline in oil prices on the forecast horizon," Nabiullina said, without providing more detail.
The bank's current "pessimistic" scenario already envisages a drop in crude prices of $20 per barrel or more. Oil and gas account for about half of Russia's government revenues.
That decline, the bank said in a recent monetary policy report, could come because of significantly weaker global economic growth, particularly in emerging markets and especially China, as well as a rise in crude exports from the United States and the Middle East.
That scenario estimates that with a dip in crude prices of $20 per barrel or more, Russia's gross domestic product would grow by 0.5 percent next year, 0.3 percent in 2016 and 0.4 percent in 2017.
Comments
Comments are closed.