Photo: Andrei Makhonin / TASS
According to the forecast of the Ministry, while maintaining the current exchange rate of the ruble inflation for the year could drop to 2.9%, which will be a new absolute minimum in post-Soviet Russia
By mid-may annual inflation in Russia fell to a planned law on the Federal budget level of 4%, the message of the Ministry of economic development. The Department explained that the reduction potential on this is not exhausted.
“While maintaining the exchange rate at the current level until the end of the year inflation in December 2017 may be reduced to 2.9% year-on-year,” the report says the MAYOR.
However, the Department suggested that the accelerated decline in inflation can be stopped by reduction of the key rate of the Bank of Russia. In this case, the ruble will be a “weak path” that will return inflation close to the target level.
“With the weakening of the ruble, in accordance with the basic forecast of Ministry of economic development, inflation at the end of the year is expected to reach 3.8% year on year”, — stated in the message the MAYOR.
In mid-April 2017 the head of the Ministry Maxim Oreshkin at the government meeting said that inflation by the end of the year can fall below 3%.
Earlier, the head of the Central Bank Elvira Nabiullina warned that the decline in the inflation rate to 2% per year (following the example of most developed countries) may create new challenges for “emerging economy” of Russia.
“If the overall price index is 2%, in some sectors, prices still are rising faster, and others may even experience deflation. Massive deflation is harmful: it reduces the incentives for investment, and in order to avoid a wide range of sectors, the inflation rate should be around 4%,” — said Nabiullina in an interview with Forbes.
By the end of 2016, inflation in Russia amounted to 5.4%, which was the absolute minimum time in recent history Russia.