Russian consumer prices rose 0.2 percent in the week to April 24, gaining pace ahead of a central bank rate-setting meeting, data from the Federal Statistics Service showed on Wednesday.
Once persistently high annual inflation is now hitting all-time lows, slowing towards the central bank’s ultimate target of 4 percent. But the latest spike in consumer prices challenges the bank’s commitment to rein in inflation in the longer term.
Inflation accelerated from 0.1 percent in the previous week, helping shift market expectations towards a more conservative policy outcome from the central bank’s meeting on Friday.
A regular Reuters poll showed 20 out of 24 analysts and economists expected the central bank to cut the key rate by 25 basis points to 9.5 percent, while the other four predicted a cut to 9.25 percent. “Acceleration in the weekly inflation became a negative surprise,” said Dmitry Dolgin, macro strategist at Gazprombank.
Dolgin said that his previous prediction of a 50 basis point cut this week now looks “too aggressive”, adding that the maximum scope for lowering rates is 25 basis points.
The data showed that weekly inflation sped up mostly becau