MOSCOW, July 7 (Reuters) - Russian annual inflation
accelerated in June to its fastest rate since August 2016, data
showed on Wednesday, providing the central bank with strong
argument to raise interest rates again this month to rein in
consumer price growth.
The consumer price index (CPI) rose 6.5% in June in
year-on-year terms after rising 6.0% in the previous month, the
statistics service Rosstat said.
The year-on-year increase in the CPI was above analysts'
expectations for an increase of 6.3% in a Reuters poll.
Month-on-month inflation was at 0.7%, the same level as in
The central bank is now expected to raise its key rate from
5.5% on July 23 as it struggles to put the brakes on annual
inflation, its key area of responsibility, which shot above its
4% target in November and shows little signs of slowing.
Central Bank Governor Elvira Nabiullina said the board will
consider raising the key rate by 25-100 basis points in July.
Higher rates help tame inflation by making lending more
expensive and bank deposits more attractive.
But tight monetary policy also restricts economic growth
and, together with a surge in COVID-19 cases, this could
challenge Russia's further economic advance.
Rosstat gave the following details:
RUSSIAN CPI June 21 May 21 June 20
Mth/mth pct change +0.69 +0.74 +0.22
- food +0.64 +0.96 +0.17
- non-food +0.68 +0.74 +0.34
- services +0.76 +0.44 +0.12
Y/Y pct change +6.50 +6.02 +3.21
Core CPI y/y pct change +6.55 +6.04 +2.89
NOTE - For key Russian indicators click here.
(Reporting by Andrey Ostroukh)