Inflation and Monetary Policy

In August, the consumer price index was the lowest in the current year and amounted to 0.1% (against 0.2% decline in August 2011). The main inflation curbing factor was the inflation decline in food prices (-0.5%). The second phase of regulated tariffs indexation urged the acceleration of inflation in September, which made 0.4% within 17 days. As a result, cumulate inflation from the beginning of the year exceeded the relevant indicator of the previous year, amounting to 5% as of September 17 (vs. 4.6% in 2011). Foreign currency and gold reserves in mid-September reached the maximum peak of the four months and amounted to $522.8bn. From September 14, the Bank of Russia has tightened the monetary and credit policy, having raised the interest rate by 0.25 p.p. to 8.25%. On September 21, the Bank of Russia decided to reduce the maximum interest rate on deposits from October 1.