Russia reports major inflation drop in 2025

Consumer price growth has slowed the most in five years, central bank data shows

Russia’s annual inflation slowed to its lowest level in five years in 2025, according to data from the country’s central bank. The figures show a marked easing in consumer price growth across much of the economy.

Year-on-year inflation stood at 5.59% in December, down from 6.64% in November, the Bank of Russia (CBR) reported this week. Over 2025 as a whole, price growth eased noticeably compared to the previous year, with non-food items rising by an average of 3% and some categories – including cars, electronics, footwear and household appliances – becoming cheaper. Services increased by 9.3% and food by 5.2%.

Seasonally adjusted, the monthly increase in prices in December was equivalent to about 2.6% in annualized terms. According to the regulator, 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, when the key rate was briefly raised as high as 21% in October 2024. In December, it 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.

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Deputy CBR Governor Aleksey Zabotkin said on Friday that the regulator’s forecast for 2026 envisages further easing, with the average key rate next year projected in a range of 13-15% under the CBR’s October outlook.

“Our forecast assumes further cuts [in the key rate] during 2026,” Zabotkin said. “But inflation is still above the target, not to mention inflation expectations, which have not yet fallen significantly. Therefore, it is premature to say that it is already time to return to neutral monetary policy.”

Analyst Vladimir Yeryomkin of RANEPA’s Institute of Applied Economic Research told Rossiyskaya Gazeta that the 2025 data shows the CBR had largely managed to bring inflation under control, creating conditions for cautious rate cuts this year, while stressing that keeping inflation on track toward the 4% target must remain the priority.