According to the Main Directorate of the Bank of Russia for the Central Federal District, the Central Bank decided for the first time since September 2022 to raise the key rate to the level of 8.5% per annum, indicating increased inflationary pressure as the reason. 

The regulator explained its decision primarily by the fact that the current annual price growth rates exceeded the target 4% and continue to grow.

Thus, in the Moscow Region in June 2023, inflation rose to 5.81% after 5.33% in May. Prices in the region grew faster due to the shift in seasonality and rising costs of producers of some food products, as well as due to the excess of demand over supply in some non-food markets.

The shift in seasonality has largely determined the dynamics of vegetable prices. This year, the seasonal reduction in the price of cucumbers and tomatoes occurred earlier (already in May) and in a larger amount than in the previous year. This happened against the background of the growth in the current year of vegetable production by greenhouses in the Moscow Region. As a result, in June, in annual terms, there was an increase in the price of tomatoes after an annual decline in prices for them a month earlier.

As noted by Rustem Mardanov, the head of the Central Federal District of the Bank of Russia, the current rate of price growth in the whole country, including a wide range of stable indicators, exceeded 4% in terms of the year and continue to grow. This is largely due to the growth of domestic demand, which exceeds the possibilities of expanding production in many industries, including due to problems in the labor market. At the same time, the transfer to prices of the ruble's weakening that has occurred since the beginning of the year is accelerating. Inflation expectations of the population and price expectations of enterprises still remain at an elevated level both in Russia as a whole and in the Central Federal District.

"The recovery phase of the development of the Russian economy, according to the assessment of the Bank of Russia, is generally completed. But the heterogeneity of trends in the dynamics of economic activity by industry and region remains. For example, in the Central Federal District, a striking example of the current situation is the growth of domestic tourist traffic noted in the Central Federal District.

This is also due to the popularization of regional recreation destinations. In addition, among the trends of the current year is the development of restaurant franchises in the Central Federal District. At the same time, the development of transport infrastructure had a positive impact on the growth of tourism in the Moscow agglomeration," Rustem Mardanov notes.

At the same time, at the current stage, the possibilities of expanding production in the Russian economy are increasingly limited by the state of the labor market. Unemployment in Russia has again updated the historical minimum. In Central Russia, it also continues to be at a historically low level, but there is a shortage of personnel in a number of industrial production sectors, agriculture and construction, which stimulates wage growth in these industries.

In June, the trend for the growth of consumer and mortgage lending in the district and in the country as a whole remained. The annual growth rate of the retail loan portfolio was the highest in the last 12 months (18% in the Russian Federation and 16% in the Central Federal District). In addition, in June, banks continued to attract funds from the population.

According to the forecast of the Bank of Russia, taking into account the monetary policy, annual inflation in the whole country will be 5.0-6.5% in 2023, will return to 4% in 2024 and will be near 4% in the future.