Is Russia on the verge of deflation?

Director of the Department of Monetary Policy of Russia's Central Bank Igor Dmitriev said that the Central Bank doesn't see threat of systemic deflation in the country. "I don't see any threat of deflation yet, although the spread of prices is quite high," he said, speaking at the 9th Gaidar Forum. Dmitriev added that deflation has already affected many groups of commodities.

He also informed that inflation in Russia slowed to 2.3%. "Although overall, in 2017 inflation was 2.5% and weekly estimate is 2.3%, we still consider it to be close to 4%," he said.

The Ministry of Economic Development said that in January of this year inflation will be 0.4-0.5%. "In January inflation will be around 0.4-0.5% and 2.3-2.5% in annual terms," the Ministry said.

According to experts, with no negative weather shocks, inflation will remain below 4% throughout the year.

The advisor on macroeconomics to the CEO of the 'Opening-Broker' brokerage house, economist Sergey Hestanov, said in an interview with Vestnik Kavkaza that the year has just started and trying to predict the exact inflation in annual term is extremely hard.

"Low inflation below 4% is an anomaly, and it's unlikely that this anomaly will last very long," he noted.

The head of the department of Economics and Finance at the Faculty of Economics and Social Sciences of RANEPA, doctor of economic sciences, Professor Alla Dvoretskaya, said that the Central Bank really fears that a drop in inflation below target would threaten the economy, that's why it tries to keep inflation close to 4%.

According expert, deflation can be observed in industries related to products, where level of prices is generally lower and overproduction can occur in certain seasons. "That's true for the food industry, for example," she said.