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Inflationary pressure not yet showing signs of weakening, annualized price growth yet to peak - Central Bank

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MOSCOW:Inflationary pressure is not yet showing any signs of weakening, with annualized price growth yet to peak, Central Bank of Russia analysts said.

Inflation in annual terms quickened to 6.50% in June 2021, the highest since 6.84% in August 2016, from 6.02% in May 2021, the State Statistics Service (Rosstat) said last week. Inflation for the month of June slowed to 0.69% from 0.74% in May but was still above the 0.6% that analysts predicted in a consensus forecast for Interfax. Prices rose 4.19% in January-June 2021. Rosstat's weekly figures indicated inflation had accelerated, to 0.46% in the week June 29-July 5, from 0.23% the previous week and 0.12% the two weeks before that. But price growth usually quickens in the first week of July as some regulated service charges go up on July 1. Year-to-date consumer price inflation was 4.53% as of July 5, above the Central Bank's 4% target for the year, and inflation for the first five days of July was 0.33%.

"In June, inflation rates and expectations were still elevated. Consequently, annual inflation exceeded 6%. As before, neither the consumer market, nor industrial sectors showed any signs of weakening inflationary pressure. Annual inflation will start to trend downwards steadily after the current monetary policy normalization generates disinflationary effects, which will take time," the Central Bank's Research and Forecasting Department said in its latest Talking Trends bulletin.

"Seasonally adjusted consumer price dynamics are still rather elevated and are showing no signs of slowing so far. As a result, annual inflation reached 6.5% in June. It is unlikely to have peaked yet, given the inertia of inflationary processes and a significant lag in their response to the monetary policy normalization process. The key indicators of sustainable inflationary processes still point to significant inflationary pressures in the consumer sector," the analysts said.

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