Excerpt from the statement by the Board of Directors:
In July and at the beginning of August the rate of inflation declined, but remained above the target range. The inflation deceleration was mainly attributed to food prices dynamics. Meanwhile, the growth rate of prices for nonfood products and services with the exception of regulated prices and tariffs also declined. Core inflation slid to 5.6 percent in July. According to the Bank of Russia estimates, there is no significant demand side inflationary pressure, as gross output stands slightly below its potential level. Assuming unchanged monetary policy stance and absence of adverse food prices shocks, the Bank of Russia expects that the rate of inflation will get back to the target range during the second half of 2013 and will continue declining in 2014.
The dynamics of the key macroeconomic indicators points out that the pace of economic growth remains low. The growth rates of industrial production remain subdued, investment in production capacity continues to decrease. In this environment some increase in the unemployment rate was recorded in recent months. Consumer demand supported by the real wage and retail lending growth remains the major driver for the economic growth. Weak investment activity combined with the sluggish recovery in external demand points out to persisting risks of further economic slowdown, also in the medium term perspective.
The Bank of Russia will continue to monitor inflation risks and the downside risks to economic growth. In making monetary policy decisions the Bank of Russia will be guided by the inflation goals and economic growth prospects.