MOSCOW, May 11. /TASS/. Annual inflation in Russia is expected to reach its minimum level in Q2 2023, after which it will start rising gradually, according to the report on the Central Bank’s monetary policy released on Thursday.

"The current dynamics of annual inflation is largely driven by the effect of high base due to abnormally high rates of price growth in March and April 2022. This is why in Q2 2023 annual inflation will reach its minimum, turning out below the 4% target. According to projections of the Bank of Russia, the current rate of price growth in annual terms will start growing gradually as low figures of monthly price increases in the summer of 2022 quit its calculation and as sustainable inflation pressure rises," the regulator said.

The gradual growth of consumer demand will serve as the main proinflation factor, the Bank of Russia said, adding that the mounting pressure from the side of labor market amid imbalances between the demand for labor and labor supply will also have an effect.

That said, lower actual price dynamics in Q1, longer influence of one-time disinflation factors (companies’ greater commodity stocks and heavy crop), as well as quicker adjustment of the economy to new conditions, including the recovery of supply chains that push the supply of consumer goods up, determine a downgrade in inflation outlook for the end of 2023 to 4.5-6.5%.

"In 2024, considering the pursued monetary policy and if the situation develops in accordance with the baseline outlook annual inflation will return to 4% in 2024 and will remain close to 4% in the future," the report said.