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MOSCOW, Jan 26 (Reuters) – Russia’s consumer inflation accelerated to 8.64% as of Jan. 21, the economy ministry said on Wednesday, up from 8.62% a week earlier as Russia continues to grapple with rising prices amid a wider market rout due to escalating tensions over Ukraine.
The central bank raised its key interest rate seven times in 2021, to 8.50% from 4.25%, and analysts anticipate another hike at the next rate-setting meeting on Feb. 11.
Inflation, which is hovering near its highest levels since early 2016 and well above the bank’s 4% target, has become an acute problem for Russia, denting living standards and prompting President Vladimir Putin to call for pre-emptive measures.
The rouble plunged to a near 15-month low on Wednesday, with Western nations promising hefty sanctions should Russia invade Ukraine, something Moscow has repeatedly denied. Russian stocks and bonds have also been hit hard.
While supportive of budget revenues, a weaker rouble contributes to inflation. Some analysts expect the central bank to hike by 100 basis points to 9.5% in February.
Earlier this month, Putin called for an 8.6% rise in public pensions this year, above the inflation rate, further increasing state social spending from last year.
Russia’s upper house of parliament, the Federation Council, on Wednesday approved amendments to allow for that move. All that remains is for Putin to sign it into law.
The central bank expects annual inflation to slow towards its target by the end of this year.
(Reporting by Darya Korsunskaya; Writing by Alexander Marrow; Editing by Katya Golubkova and Jonathan Oatis)
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