After the holidays: how the VAT increase will affect inflation

According to Kirill Tremasov, adviser to the Chairman of the Bank of Russia, deviations from the forecast for inflation this year will be small. Izvestia found out what impact the VAT increase will have on inflation and when it will become noticeable.

Less than a percent

According to the calculations of the Bank of Russia, the effect of the upcoming VAT increase next year can be estimated at 0.8 percentage points. It will mainly manifest itself in January 2026.

The Central Bank's forecast for next year remains generally valid, as there are no other variables to account for yet. Kirill Tremasov, Adviser to the Chairman of the Bank of Russia, assessed the deviations in inflation this year at a communication session with representatives of regional businesses in Yekaterinburg as small.

The experts surveyed consider the statement about the short-term "January" effect to be optimistic. Thus, according to Evgeny Goryunov, head of the Monetary Policy Laboratory at the Gaidar Institute, the effect of the VAT increase will quickly spread over the entire first quarter of 2026. "The population's inflation expectations will rise briefly and then gradually decrease," he says.

In general, Goryunov agrees with Tremasov's assessment and considers the contribution of the VAT factor to inflation by the end of 2026 to be 0.5-0.8 percentage points.

However, as Olga Belenkaya, head of the Macroeconomic analysis department at Finam, noted, the effect will be not only from the actual rate increase from 20% to 22%, but also from the accompanying changes. "In particular, the terms of its accrual for enterprises on the USN are being changed, and the VAT exemption on bank card servicing operations is being canceled."

The multiplicative effect

Yulia Makarenko, Deputy Director of the Banking Institute for Development, believes that the contribution of the VAT increase to inflation of 0.8 percentage points is underestimated.

— The entire economy will feel the impact, even in the category of goods subject to preferential VAT of 10%. The fact is that the prices of suppliers' goods and services will be revised up throughout the entire product chain, in services (for example, transport), for all materials and consumables, etc., she comments.

Changes in legislation will affect, in particular, importers, the financier notes.

— They will be required to pay VAT in advance. This implies a high financial burden and more careful planning. It's not just about those who buy goods abroad and resell them on marketplaces, although they do too. But first of all, about manufacturers of domestic goods who need imported spare parts, consumables, etc.," she explains.

The expert estimates the contribution of the VAT factor to inflation at least 1.5 percentage points. More accurate estimates are not possible, since an increase in VAT will affect prices, including indirectly.

Alexander Abramov, Head of the Laboratory for Analysis of Institutions and Financial markets at the Presidential Academy, also reports on indirect effects.

"In some cases, businesses will try to shift their additional VAT costs onto consumers," he said.

In addition, the expert mentioned another effect — a slowdown in economic growth.

"To prevent it, it will be necessary to pursue a more lenient fiscal or monetary policy, which, in turn, may also spur inflation," he added.

Estimating the direct contribution from the VAT increase, Abramov predicts a price increase of at least 1% in January.

Not only VAT

The value of inflation consists of a huge number of pro-inflationary and inflationary factors. And the VAT increase will most likely not be the most significant of the inflation-boosting moments in 2026, Ekaterina Kosareva, managing partner of the VMT Consult analytical agency, is convinced.

— Firstly, the balance of supply and demand. Demand will grow even with the slightest easing of the PREP from the Bank of Russia — the demand accumulated during the high rate period is too high, this has been evident since July, when the first effects of easing appeared. The more smoothly the key rate is lowered, the less likely shocks are. Secondly, the ruble exchange rate, which, in turn, is under pressure from a lot of factors: from the size of the foreign trade balance and oil prices to the next round of trade wars and sanctions pressure on Russia. The government has a number of management tools here, such as the sale and purchase of gold and foreign currency," the expert lists the most important variables.

According to the analyst, another critical factor is the inflation expectations of the population.

— This is a poorly controlled moment. Rising inflation expectations inevitably stimulate consumption. And business puts growth in price lists (what is happening now due to the upcoming VAT increase), - says Kosareva.

In addition to the above, she mentioned the factors of crop failure, secondary sanctions, fluctuations in world prices for raw materials and goods, uneven growth in gasoline prices in the country, low unemployment and the associated shortage of personnel, the impact of monopolies, the digitalization of the economy (and the associated optimization of labor costs), etc.

— Thus, the contribution estimate of 0.8 percentage points, voiced by Tremasov, is fully consistent with economic realities. Moreover, the growth will be uniform — there will be much more VAT payers themselves due to the next round of tax reform. So, the simplified tax service will work with VAT with revenue of 10 million rubles (in 2025, the threshold is 60 million rubles), the expert confirmed.

What's with the "key"

The next meeting of the Bank of Russia on the key interest rate is scheduled for December 19, 2025.

According to Kirill Tremasov, two scenarios seem most likely in the absence of powerful pro—inflationary shocks - a decrease of 0.5 percentage points to 16% or a continuation at the current level. At the same time, monetary policy will depend on inflation until it reaches the 4% target.

The majority of the publication's respondents doubt the imminent easing of monetary policy. Thus, the increase in VAT, along with the indexation of a number of prices since the beginning of the year, will almost certainly lead to an increase in inflation expectations and force the Central Bank to take at least a short—term pause in reducing the key rate, says Grigory Zhirnov, an employee of the Laboratory of Macrostructural Modeling at the Faculty of Economics at the National Research University Higher School of Economics.

— Companies have already reacted to the expected VAT increase. The population will probably pay attention to this towards the end of this year or the beginning of next year, when they see the actual price increase," he says.

The expert also noted that in the last 1-2 years, price administration has helped to contain inflationary pressure. "Therefore, companies can use the VAT increase factor to increase prices more strongly," he concludes.