The Four-year War: has it been possible to curb inflation in Russia and the world
Global inflation, which accelerated after the pandemic, has not yet returned to normal, but is gradually decreasing. Russia is also gradually returning to the target. How long will this process take and how quickly should the Central Bank's refinancing rates be lowered? How have Trump's tariffs affected global inflation? What is the reason for deflation in China? How will monetary policy affect the price situation in Russia? These issues were discussed at the webinar "Inflation 2025: Global trends and Russian specifics" at the Expert RA rating agency.
Faster than we would like
As noted in the agency's report, after a period of rate hikes in most developed countries, inflation has steadily returned to or near its target values. At the same time, in the eurozone countries, inflation fluctuates around the target value, while in the United States it is steadily above it. In the UK, inflation returned to the target values in mid-2024 and accelerated again in 2025. This was due to an increase in the cost of housing for owners, which peaked at the end of last year, but has been declining throughout the current year, which will contribute to a slowdown in overall inflation in the country.
Core inflation (price increases minus the cost of energy and food) are also at levels around the target values in the eurozone countries and steadily above them in the UK and the USA, which indicates the need to maintain significant rates for some time.
In developing countries, inflation has also mostly returned to target values. High rates of price growth — more than 20% — in 2025 remained only in certain countries for which inflation problems have been traditional in recent years and even decades: Turkey, Argentina, Venezuela, Bolivia, Egypt and a number of other African countries. There are also traditionally quite high (more than 10%) price growth rates in the former Soviet Union.
In general, inflation did not slow down everywhere in 2025 as expected. This may partly be explained by the White House's imposition of tariffs against the vast majority of countries in the world, including key trading partners. However, according to NES Professor Oleg Shibanov, the tariff effect is unlikely to be very strong, amounting to about one additional percentage point to "normal" inflation for the American economy. In addition, it is also stretched over time.
Inflation may return
Central banks have seriously softened their monetary policy over the past year, as issues of slowing economic growth (and in some cases, recession) have been raised they have become a priority compared to inflation. For the vast majority of major central banks, 2025 has been a year of gradual interest rate cuts. There are very few cases of the opposite: Japan (in January 2025) and Brazil (four times a year). In Japan, inflation has been steadily above target since mid-2022, and although the Bank of Japan still regards this process as a return to normal economic health after decades of deflation, it is already beginning to talk about an imminent possible rate increase in order to achieve neutral values.
Central Bank of Japan Building, Tokyo
In Brazil, the interest rate has increased from 12.25% to 15% in less than a year. The increase cycle began in the fall of 2024 due to the emergence of inflationary trends amid global uncertainty and a revival of domestic economic activity.
According to Egor Susin, Head of Gazprombank's Center for Market Strategies, there are significant risks that inflation will return globally. In addition to duties and fragmentation of the global economy, he noted that the current relatively high rates of price growth (above 2% in most even developed countries) occur against the background of the low cost of most raw materials (not counting some like gold, which has a special history). If they take off for some reason, this may lead to a new round of inflation. According to the analyst, it will be very difficult to counteract it with the help of monetary policy due to the huge budget deficits that these countries currently have. Therefore, the risks of accelerating inflation have not gone away, says Susin.
China is not like everyone else
China is a special case, moving in this sense out of phase with most of the rest of the world. The Chinese economy has been in a state of deflation for the past two years. The consumer price index is fixed at levels near zero and sometimes goes into negative territory. In a number of sectors, these processes bring with them all the negative consequences of the deflationary spiral for the economy.
Steady deflation has been observed in the food and tobacco categories in recent months. Inflationary processes among consumer goods are visible only in the category of "diverse goods" (i.e. goods other than food and tobacco, housing, transport, education and culture, and healthcare). At the same time, the composition of this category, the only one where prices are rising, is not disclosed by Chinese statistics.
Among the causes of deflation in China is the crisis in the real estate market, which provoked a decrease in consumption, as well as the tariffs and restrictions imposed by the United States. It has become harder to sell products made in China on foreign markets, although exports remain stable due to the redirection of trade flows.
Reduce, but not dramatically
In Russia, where inflation has reached double digits at some point, the general global trend of slowing price growth has also been recorded. Now its figure is about 5.4%, that is, for the whole year it is unlikely to be higher than 5.5–5.6%.
Different goods have risen in price to varying degrees over the past year, as always, but in 2025 there were no goods that rose in price by an order of magnitude above the average inflation rate. Gasoline has affected inflation the most over the past 12 months since November 18, 2024 - it has increased by 14%, and its share in the structure of consumer spending is 4.35%. Many food products have increased in price by more than 10%. Utilities have also increased in price by 13-15%. Eggs (-14%), potatoes (-20%) and cabbage (-19%) contributed to the decrease in price growth.
The indicators of observed and expected inflation, although they remain high, also had a slight downward trend; for observed inflation, this trend is more pronounced. However, in November 2025, inflation expectations increased, probably due to the news of an increase in VAT from January 1, 2026 and a change in the rules for calculating waste collection from December 1, 2025. The main increase in inflation expectations occurred in the group of the population with savings — their inflation expectations increased from 11.1% to 12.3%, while the inflation expectations of the group of the population without savings even decreased slightly — from 13.8% to 13.7%.
Labor market tensions are also decreasing to some extent: the share of enterprises reporting staff shortages is falling, although not very quickly. However, there is a fairly strong variation across sectors. There is a severe shortage in agriculture and water supply. The situation in the manufacturing industry remains difficult, despite the increased availability of personnel to enterprises. Enterprises' price expectations are also growing in the last two months of the year — 4.2% in October and 6.3% in November, compared with the average for the third quarter of 3.7%. Finally, producer inflation has remained low over the past six months, at around zero.
The Bank of Russia has been actively reducing the rate in recent months. Nevertheless, if we focus on the current levels of inflation, the real rate remains extremely high, exceeding 10%. This is one of the highest rates in the world. Nevertheless, according to Egor Susin, the Central Bank should follow the trend rather than short-term fluctuations in the future. According to him, the pace of price growth in the next six months will be like a swing. So, in the autumn we have already seen a sharp slowdown. However, a seasonal increase will begin in January, accompanied by an increase in tariffs, as well as tax-related effects. In the summer, we may see a new slowdown. In this situation, it is important to reduce the rate smoothly, rather than making sudden movements, the economist believes. If you do this quickly, then the excess amount of savings in conditions of high inflation expectations can spill out onto the market overnight.
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