OREANDA-NEWS  In July, Russians' inflation expectations reached 14.7 percent, which was the highest since March 2022 and 2.3 percentage points higher than in June. The results of the inFOM survey are provided in the materials of the Central Bank, which is the customer of the study.

The observed inflation returned to the May level of 15.1 percent, and the expected price increase in five years rose to 11.2 percent. In June, inflation expectations for the year and five years ahead fell to two-year lows, and the observed inflation was close to the minimum.

Such a sharp increase in the latter indicator was fully ensured by the category of citizens who do not have savings. For them, the observed inflation soared from 15.1 percent to 17.1 percent, while citizens with savings talked about an increase from 13 percent to 13.1 percent. However, both categories assess changes in expected inflation in almost the same way — an increase from 13.6 percent to 16.5 percent and from 11 percent to 13 percent, respectively.

Such survey results for the Central Bank will become a serious argument against the continuation of monetary policy easing at the meeting on Friday, July 24.

The current level of inflation expectations is already higher than the key rate, which provokes a sharp increase in retail lending (borrowers expect prices to rise more than loan rates), which means it is a pro-inflationary factor. The rapid growth of retail lending in June and May also indicates a change in sentiment.

Most analysts still expect the Bank of Russia to keep its key rate at 14.25 percent.