Minister: Russia’s inflation not to exceed 4% in 2020

MOSCOW, May 19 (PRIME) -- Russia’s inflation will not exceed 4% in 2020, Economic Development Minister Maxim Reshetnikov said at a meeting on Tuesday.

“The devaluation effect that was seen has been mostly exhausted at the moment. What happened as a result of quarantine measures was a slight contraction in demand, of course, it had a bright anti-inflationary effect. We expect that inflation will not exceed our forecast of 4% this year,” he said.

Indicators of economic activity in Russia are growing, the economy started to recover, Reshetnikov said.

“If we talk about economic recovery, the figures of the last few days literally show that the dynamics have gone up,” he said.

Russia’s economic decline in 2020 may be lower than expected, but access to the recovery trajectory will take time, the minister said.

“On the one hand, we see that maybe the level of economic decline will be less than we expected. But at the same time, of course, it will take time to return to the recovery path,” he said.

The central bank expects Russia’s gross domestic product (GDP) to fall 4–6% in 2020.

The ministry plans to submit its forecast for Russia’s socioeconomic development in 2020–2022 to the government on Wednesday, Reshetnikov said.

President Vladimir Putin said at the meeting that inflation in Russia is slightly slowing and the ruble started to strengthen.

“As far as I can see from the documents, our inflation slows down a little and the ruble began to strengthen,” Putin said.

Central bank Chairwoman Elvira Nabiullina said that inflation was slowing in late April and early May and annual inflation stabilized at around 1.3%.

“Indeed, inflation after growth in March–April ... we observed excessive growth of prices for certain goods, this was due to the dynamics of the exchange rate and the fact that there was an increased demand for a number of products, primarily of long-term storage. Nevertheless, we see that in late April–early May, the price growth rate as a whole decreases, this indicates a weakening of inflationary factors. In the near future, we see that disinflationary factors will dominate. Now inflation has stabilized somewhere at 3.1% in annual terms,” she said.

Nabiullina also said that the central bank still sees a potential for a further reduction of the key rate from the current 5.5%.

“If the situation develops in accordance with our expectations, our forecast, we have the potential to further reduce the interest rate in order to support demand in the economy, especially at a time when restrictive measures are being gradually lifted,” she said.

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