Inflation in Russia must be reduced as soon as possible, “not to allow the inflationary spiral to unfold,” said the head of the Central Bank of the Russian Federation Elvira Nabiullina, speaking at the Federation Council.
According to Rosstat, annual inflation accelerated in August to 6.68%, and by September 6 – to 6.74-6.75%. “Inflation will return to the level of 4-4.5% in the second half of next year,” Nabiullina said.
Because of high inflation, people have high inflationary expectations, consumers start buying things while they are cheap, and this accelerates the rise in prices.
“When people expect inflation to rise, they start spending more, save less, fearing that money will depreciate, make large purchases even on credit, expecting that the goods they need will rise in price,” explained the head of the Central Bank. “And this in itself pushes inflation up “.
To return inflation to 4%, more than one increase in the key rate may be needed, the Central Bank said, adding that this will lead to an increase in the cost of loans.