Russian households' one-year inflation expectations fell a percentage point to 13.2% in October, but their five-year expectations jumped 1.5 points to 12.2%, the Bank of Russia said on October 28.

Russian households' median one-year inflation expectations against actual CPI inflation, % y/y, January 2024 to October 2026. The dashed line is the Bank of Russia's 4% target. Source: Bank of Russia (inFOM survey), Rosstat.

The median one-year reading from the monthly inFOM survey, carried out for the central bank among 2,020 adults on October 5-15, undid most of September's rise to 14.2% from 13.7% in August. It is still 0.6 points higher than a year earlier and inside the elevated range of 2024-2025, according to the regulator's monthly "Inflation expectations and consumer sentiment" commentary.

The central bank watches household expectations closely when it sets rates, and they remain more than double actual inflation, which was 6.4% y/y in September. The Bank of Russia held its key rate at 14% for a second meeting on October 23 and raised its rate path for 2027, with Governor Elvira Nabiullina saying the room for cuts next year had narrowed.

Nabiullina warned after the meeting that October's increase in utility tariffs "has so far had little effect on household inflation expectations because people will receive the new bills later."

The bills are starting to register in the survey: respondents named housing and utility services, eggs, meat and poultry, and fruit and vegetables far more often in October among the items whose prices had risen most, and petrol was still frequently cited.

Expectations fell both among respondents with savings, to 11.6%, and among those without, to 14.6%. Perceived inflation - what households believe prices have done over the past year - eased 0.6 points to 14.5%, 2.3 times the official rate, against an average multiple of 2.0 in 2022-2025.

Five-year expectations moved the other way, rising to 12.2% from 10.7% in September, when they had fallen 1.7 points. Bond markets point in the same direction: the central bank's estimate of inflation priced into inflation-linked OFZ government bonds rose 1.6 points to an average 10.6% for 2028-2030 and 0.7 points to 10.9% for 2030-2032.

The consumer sentiment index slipped to 95.1 points from 95.5 in September and was 7.1 points lower y/y, below its 2023-2025 levels. Views of the current situation weakened while expectations improved slightly. The share of respondents who would rather save than buy big-ticket items fell 3.6 points to 49.3%, while the share preferring to spend rose 4.3 points to 32.7%.

Price expectations among the 11,500 firms in the central bank's monitoring survey fell in most sectors except agriculture, even as they reported rising actual and expected demand, and the average price increase they expect over the next three months eased 0.2 points to 6.4% in seasonally adjusted annualised terms. Electricity and water utilities were the exception, after the October tariff indexation.

Professional analysts polled by the Bank of Russia in October raised their year-end inflation forecasts to 7.1% for 2026 and 5% for 2027, up 0.5 and 0.4 points respectively. The regulator's own forecast is 7.1-7.6% for 2026, with inflation returning to the 4% target in 2027. Annual inflation was estimated at 6.8% as of October 19.