Cbanker says CPI to return to 4% after VAT hike effect fades

MOSCOW, Oct 16 (PRIME) – Russia’s consumer price index will return to 4% as soon as a one-time impact from an increase of value-added tax (VAT), slated for January 2019, fades, First Deputy Chairwoman of the Central Bank Elvira Nabiullina said at a meeting with the State Duma, parliament’s lower chamber, on Tuesday.

“In particular, we assess the one-time impact of the VAT increase on inflation at about 1 percentage point in 2019, and this is the main reason why inflation will be higher than the target in 2019… as soon as this one-time effect fades, inflation will return to about 4%,” Yudayeva said.

Deputy Economic Development Minister Azer Talybov said that inflation is to peak at 5.5% in January–March. He said that credit activity is forecasted to slow down due to volatility on financial markets, and will contribute to a generally tough situation expected in the period. Inflation will later fall to 4.3%, forecasted for 2019.

The gross domestic product (GDP) growth will slow down to 1.3% in 2019 from 1.8% in 2018, the official said.

(65.7508 rubles – U.S. $1)

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