Russia's January inflation picks up to 5.2%, above central bank target

MOSCOW: Consumer inflation in Russia accelerated to 5.2% in January in year-on-year terms from 4.9% the previous month, the statistics service said on Friday, a week ahead of the central bank's first rate-setting meeting of the year.

Higher inflation limits room for monetary easing needed to revive the economy, which has been hit by the COVID-19 pandemic and related lockdowns as well as globally lower prices for Russian exports such as oil.

A rapid drop in the rouble boosted consumer inflation in 2020 as it filtered down into prices, the central bank has said. It expects inflation to peak in February and slow from March.

State statistics service Rosstat said it had revised the weight of goods in its inflation basket, mainly because food consumption has gone up during the pandemic, while expenditure on cars and tourism decreased.

The share of food products increased by around 1.2%, while services and non-food items decreased by 1% and 0.2% respectively.

"With the end of the active phase of food price increases in November-December 2020, inflation expectations have also started to stabilise," Raiffeisen Bank analysts said.

Month-on-month inflation stood at 0.7%, slipping from 0.8% in December.

Despite inflation climbing well above the bank's 4% target, the bank is expected to hold its key interest rate at a record low of 4.25%, where it has been since July.

"Overall, for now it is logical to expect the central bank key rate to remain unchanged," said Dmitry Polevoy, head of investment at Locko-Invest.