Russia’s Above Target Inflation Clouds Path for New Rate Cuts

Russian inflation remained stubbornly above the central bank’s target, further clouding prospects for a resumption of interest rate cuts as policymakers weigh the impact of an increase in regulated tariffs.

Consumer prices rose 6.35% in September from a year ago, according to data from the Federal Statistics Service released Friday. The median estimate of nine economists surveyed by Bloomberg was for 6.3%. Price growth accelerated 0.35% month-on-month.

While seasonal declines in fruit and vegetable prices likely helped contain price growth, inflation may pick up after an increase in tariffs took effect this month. Weekly price growth surged to 0.96% from 0.12% the previous week, driven by the utility prices, the statistics service reported on Wednesday.

“For the economy, this is, of course, a significant inflationary factor,” Evgeny Suvorov, the chief economist at Moscow-based CentroCredit Bank, said. “I had expected the key rate to remain unchanged at 14% through the end of the year, but now a rate hike is starting to look like a real possibility.”

The central bank, which is due to discuss monetary policy on Oct. 23, held the rate for the first time since June 2025 last month, responding to inflation risks from the fuel disruptions and increased state spending.

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Policymakers had raised their price-growth forecast to 6%–7% by the end of 2026, implying inflation will miss their 4% target for a seventh consecutive year. Ukrainian attacks on Russian refineries have continued to affect the fuel market and the budget deficit looks set to end the year at twice the level originally expected.

Commenting on the September decision, Governor Elvira Nabiullina told reporters that “put simply, our task is to ensure that today’s rise in gasoline prices does not turn into high inflation tomorrow.”