Russia's Central Bank Raises Inflation Forecast to 6-7% for 2026, Cuts GDP Growth Outlook

The Central Bank of Russia expects inflation at 6–7% in 2026 "due to the significant increase in fuel prices that has already occurred". Previously, the regulator had expected it to slow to 4.5–5.5%. Inflation expectations among households, businesses and financial market participants have risen. Their persistence at elevated levels may impede a sustained slowdown in inflation, the Bank of Russia said in a press release. "The fuel situation falls into what is known as supply shocks," admitted Elvira Nabiullina, the head of the Bank of Russia, at a press conference on the same day. Since mid-May, fuel price growth has accelerated, and in June several Russian regions faced shortages after Ukrainian strikes on oil refineries in Russia in response to the war launched by the Kremlin. At the same time, some analysts forecast that by the end of the year inflation in Russia could turn out even higher, including as a result of strikes by the Ukrainian Armed Forces on Russian logistics centres. The forecast for Russian GDP growth in 2026 has been cut from 0.5–1.5% to 0.0–1.0%, including the projection for the fourth quarter (from 1.0–2.0% to 0.0–1.5% year-on-year). "Companies expect demand to slow, as follows from the real-time data. Taking into account the temporary reduction in capacity in the economy, we have lowered our GDP growth forecast," the head of the Bank of Russia commented. The Central Bank expects that "fuel production capacity will gradually be restored by the end of the year", but Ukraine continues to use its "long-range sanctions" in response to Russian attacks. On Saturday, Ukrainian drones struck an oil refinery in Tyumen, a logistics facility in Yekaterinburg and a fuel and lubricants depot in Rostov-on-Don.