Economic Outlook in Russia

MOSCOW (Reuters) – Russian companies surveyed by the central bank expect inflation in 2025 to reach 10.7%, which is more than double the official forecast. Labour shortages are identified as a key limitation on production expansion, as reported by the central bank on Friday.

The central bank held interest rates steady at 21% in December, surprising markets that anticipated a potential increase to 23%. The inflation rate for 2024 was 9.52%, marking the fourth highest in the past 15 years, compared to 7.42% in 2023 and significantly above the bank’s 4% target.

The survey, covering nearly 15,000 companies, revealed that businesses expected an average inflation rate of 10.7% while planning for 2025.

In January, credit conditions remained tight, and the central bank signaled that it would consider elevated inflation expectations in its upcoming rate-setting meeting scheduled for Feb. 14.

Expectations regarding price changes for goods over the next three months remained stable in January after experiencing increases for four consecutive months, according to the survey. Additionally, the central bank noted that its business climate indicator reached its lowest level in two years in January.