Russia’s annual inflation rate has slowed to its lowest level in five years, according to data from the country’s central bank. The Bank of Russia (CBR) reported that year-on-year inflation stood at 5.59% in December, down from 6.64% in November. This decline marks a significant easing in consumer price growth across much of the economy.
The CBR’s data shows that price growth eased noticeably in 2025 compared to the previous year, with non-food items rising by an average of 3%. Some categories, including cars, electronics, footwear, and household appliances, even became cheaper. Services increased by 9.3%, while food prices rose by 5.2%. On a seasonally adjusted basis, the monthly increase in prices in December was equivalent to about 2.6% in annualized terms.
The regulator’s measures of underlying, or “sustainable,” inflation remained in a 4-6% range, close to its 4% target. The CBR has been gradually unwinding the emergency tightening introduced after Western sanctions and ruble volatility, which led to a brief increase in the key rate to 21% in October 2024. In December, the CBR cut the rate for the fifth time since June, by 50 basis points to 16%, while pledging to keep policy “as tight as required” to bring inflation back on target.
According to Deputy CBR Governor Aleksey Zabotkin, the regulator’s forecast for 2026 envisages further easing, with the average key rate next year projected in a range of 13-15%. Zabotkin noted that while inflation is still above the target, and inflation expectations have not yet fallen significantly, the CBR assumes further cuts in the key rate during 2026. Analyst Vladimir Yeryomkin of RANEPA’s Institute of Applied Economic Research agrees that the 2025 data shows the CBR has largely managed to bring inflation under control, creating conditions for cautious rate cuts this year.
The decline in inflation is a positive development for the Russian economy, and the CBR’s cautious approach to monetary policy is aimed at sustaining this trend. As the regulator continues to monitor inflation and adjust its policy accordingly, it remains to be seen whether the target of 4% inflation can be achieved in the coming year. With the CBR committed to keeping policy “as tight as required,” the focus will remain on bringing inflation back on track and ensuring the stability of the economy.
