Central bank department says low inflation not stable yet

MOSCOW, Jun 3 (PRIME) – Russia’s low May inflation was mainly caused by one-time disinflation factors, the research and forecast department of the central bank said late on Thursday.

"The small growth of consumer prices in May was to a great extent caused by several one-time disinflation factors, mainly by dramatic strengthening of the ruble. The significant ruble strengthening coupled with falling consumer activity and inflation expectations led to a rapid deceleration of consumer price growth in April and May, which, however, cannot be called stable yet," the analysts said.

The statement added that as soon as the effect of the factors fades, prices can start to rise again.

The decrease of Russia's economic activity in April–June is to be insignificant as compared with March, the department said.

"At the same time, further trajectory of the economy in the second half of the year will to a great extent depend on the scale on which the companies will be able to find alternative channels of foreign supplies or imports substitution by local producers," the statement read.

At the same time, a time lag may occur before the economy transforms, in this case the decrease of production and supply may deepen.

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