December 29, 2018 / 1:13 PM / 5 months ago

Russia's 2018 inflation hits 4.2 pct, above central bank's target

MOSCOW (Reuters) - Russia’s consumer price index (CPI) rose slightly above the central bank target of 4 percent in 2018, the statistics service’s preliminary data showed on Saturday.

A view shows a Russian one rouble coin in this picture illustration taken October 26, 2018. Picture taken October 26, 2018. REUTERS/Maxim Shemetov

Earlier this month, the central bank raised its key interest rate, seeking to keep a grip on rising inflation spurred by an increase in value-added tax from 2019 and some external factors.

Annual inflation in December accelerated to 4.2 percent, exceeding the central bank’s target of 4.0 percent for the first time since June 2017.

Month on month, inflation picked up to 0.8 percent in December from 0.5 percent in November.

The central bank governor Elvira Nabiullina said this month that the central bank had acted proactively trying to curb the inflationary risks.

Inflationary expectations, another factor the central bank is paying a close attention to, continued to rise in December.

According to Nabiullina, inflation may peak at 6 percent in the first part of next year but the central bank still sees room for the monetary policy easing at the end of 2019 or early 2020.

Kirill Tremasov, the head of research at Loko-Invest, said it was highly likely that the CPI would continue to rise early next year and that such a trend could be a “serious argument” for a further rate hike by the central bank.

Oil prices fell to their lowest in more than a year this month to less than $50 per barrel because of supply glut fears, sending the rouble to its weakest since mid-September.

“I rather expect an increase (of the key rate) in February,” Tremasov said.

Reporting by Polina Nikolskaya; Editing by Andrey Ostroukh and Jane Merriman

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