In February, a decline was registered in prices of a number of products which had made a considerable contribution to acceleration of food inflation. Furthermore, both domestic and external prices of main crops stopped growing in recent months. Current harvest expectations for this year are favourable, which also limits risks in this part. Petrol and diesel prices were comparatively stable in December-February, and even drifted down slightly in February. This constrained inflation acceleration. Furthermore, the ruble appreciated in the opening months of the year; this had a favourable effect on prices and inflation expectations. Inflation expectations is the second factor we closely monitor. We had concerns about their 1/3  BIS central bankers' speeches  possible response to inflation acceleration. Expectations of professional analysts remain anchored. Analysts understand the temporary nature of this year’s inflation acceleration associated with one-off factors, in particular, the VAT. Therefore, as the Bank of Russia, they forecast a moderate increase in inflation in 2019 and expect inflation to come in at 4% from next year onwards. Households and businesses responded to inflation acceleration more pronouncedly. Expectations of households rose from a historic low of 7.8% seen last April to 10.4% in January, that is returned to their mid-2017 readings. Businesses’ price expectations also jumped considerably. However, household inflation expectations dropped to 9.1% as early as March. Price expectations of businesses also declined. However, they both remain elevated. It is of special note that inflation expectations of households and businesses demonstrated last year that they remained unanchored.

The baseline scenario has been revised upwards from $ to $ a barrel; the high oil price scenario has been revised downwards from $ to $ Our oil price forecast for 2020–2021 remains unchanged. These adjustments have made no major impact on expected economic growth indicators in the context of the operating fiscal rule. Finalised data suggest GDP growth was 2.3% last year, above our expectations. Our estimates suggest that the accomplishment of major investment projects emerged as key enablers of this growth. With due regard for this, we, first, reconfirm our assessment of the nature of economic growth: the economy is close to its potential; its expansion does not create additional proinflationary pressure. Second, we keep our GDP growth estimate in the baseline scenario at 1.2-1.7% for this year. The growth rates will accelerate to 1.8-2.3% in 2020 and 2-3% in 2021 as the positive effect of national projects and structural reforms provided that these deliver. The oil price adjustments in the forecast carry implications for balance of payments indicators. In the baseline scenario, the forecast current account balance for this year has been upgraded from $ billion to $ billion, chiefly on the back of a higher value of oil and gas exports. The balance of the financial account of the private sector has also been raised from with $ billion to $ billion. This is based on the actual data for the first two months of the year along with greater opportunities for the buildup of foreign assets given the higher export revenues.