In 2016, the inflation rate was 5.4%, compared to 12.9% in 2015, according to Federal Service of State Statistics. This is the minimum rate for the past 25 years, according to IndexBox analysts: the previous record was in 2011, when the inflation reached 6.1%.
One of the main reasons of prices stabilization was strengthening of the ruble, connected to oil prices growth; in 2016, the average dollar exchange rate decreased by 17% to 60.6 rubles per dollar.
Another reason for the deceleration of the inflation rate was the tough monetary policy of the Central Bank: in 2016, the key rate was reduced only twice – in June and September (to 10%). This meant the growth of money market rates, which increased savings amount, slowed down credit activities and controlled prices growth.
Another reason was the decrease of domestic demand: for the first 11 months of 2016, the real income of the population declined by 5.8% and retail trade turnover – by 5.1% in annual terms.
In 2016, the inflation rate for food products was 4.6%, compared to 14% in 2015, for industrial goods – 6.5%, compared to 13.7% in 2015, and for paid services – 4.9%, compared to 10.2% in 2015.
As for the inflation rate forecast for 2017, despite the decline in inflation rate, it may not reach the forecast level of the Central Bank (4%), according to analysts. One of the reasons for that is the recovery of the domestic demand, which is very likely as real incomes got more stable. According to IndexBox, the inflation rate of 4% may be achieved if the embargo is lifted.