Inflation is expected to decelerate to 8.5% by the close of September, as per the Central Bank's prediction.
The annual inflation rate in Russia, as of July 28, according to the Ministry of Economic Development, stands at 9.02%. This figure is lower than the Bank of Russia's April forecast of 10.1%, indicating a positive trend in price growth control.
The Bank of Russia attributes the slowdown in price growth to its tight monetary policy. This policy, which aims to curb inflation, has been successful in restraining price increases, as evidenced by the bank's Q2 2025 inflation rate of 9.4%, lower than the mid-year average of 9.2-9.4%.
Inflationary pressures have declined faster than expected, with domestic demand growth slowing and the tight monetary policy continuing to restrain price increases. Seasonally adjusted price growth slowed to about 4.8% annualized in Q2 2025, down from around 8.2% in Q1.
Looking ahead, the Bank of Russia predicts that inflation will decline to 6-7% by the end of 2025. This forecast aligns with the Ministry of Economic Development's April prediction. The central bank also expects to return to the target inflation rate of 4% in 2026 and remain around that target thereafter.
Monetary policy will remain tight with key rate decisions reflecting the goal of sustained inflation slowdown. The average key rate is expected to be around 18.8–19.6% in 2025, before easing to 12.0–13.0% in 2026. This policy is designed to support inflation decline and balanced economic growth in the following years.
GDP growth in Russia is modest but stable, with Q2 2025 showing about 1.8% growth partly driven by investments but restrained by weak domestic demand. The central bank’s policy aims to balance inflation control and economic stability over 2025-2026.
The Ministry of Economic Development, in its July report, allows for a possible adjustment of the 2025 inflation forecast to below 7% if the current trend continues. However, as of July, the ministry maintained its 2025 inflation forecast at 7.6%.
Sources: 1. Russian GDP Growth in Q2 2025 2. Bank of Russia's Monetary Policy Statement 3. Ministry of Economic Development's Inflation Report 4. Bank of Russia's Inflation Forecast
The tight monetary policy implemented by the Bank of Russia is aimed at controlling inflation within the economy, particularly in the finance sector. The central bank predicts that inflation will decline to 6-7% by the end of 2025, decreasing further to 4% in 2026, as a result of this policy.
