Russia: Inflation picks up in January from prior month
Latest reading: Consumer prices rose 6.0% in annual terms in January, following a 5.6% increase in the prior month. January’s reading marked the first acceleration in inflation since March 2025.
Relative to the prior month’s figures, there were higher price pressures for non-food goods (+3.2% in annual terms vs +3.0% in December), food and beverages (+5.9% vs +5.2% in December) and services (+9.6% vs +9.3% in December).
Meanwhile, core consumer prices were up 5.4% in annual terms in January, unchanged from the prior month’s reading.
Lastly, consumer prices increased 1.62% in January in month-on-month terms, following a 0.32% rise in the prior month.
January’s pickup in inflation after its slowdown to an over two-year low in December was primarily driven by hikes in VAT—from 20% to 22%—and excise taxes, as well as the indexation of tariffs and prices on utilities, public transport and communication and culture services from 2026, as well as higher price pressures for fresh food. Meanwhile, inflation expectations fell in February to their April 2025 level, after remaining unchanged in the prior month, pointing to a reduced risk of elevated inflation in the near term.
Outlook: Our panelists expect inflation to decrease from Q4 2025’s over two-year low through Q3 2026, viewing January’s spike as largely driven by temporary and seasonal factors rather than persistent underlying price pressures.
Average inflation is expected to ease to a six-year low this year but remain well above the Central Bank’s 4.0% target. Price pressures should be contained by still-strict monetary policy, fiscal consolidation and slower wage and private spending growth. Meanwhile, the persistent gap between inflation expectations and actual inflation will continue to curb the effectiveness of monetary policy in constraining price pressures. Risks are tilted to the upside and include a potential failure to contain the fiscal deficit and a sharper-than-projected depreciation of the ruble vs the USD.