Russian Fuel Prices Added 0.5 Percentage Points to Inflation Amid Refinery Attacks, Central Bank Says

A surge in Russian fuel prices contributed a cumulative 0.5 percentage points to consumer price inflation in June and the first half of July, the Bank of Russia stated Wednesday. The central bank attributed the increase to supply disruptions following Ukrainian drone attacks on the nation's refineries.

Inflationary Impact

According to minutes from its July 24 monetary policy meeting, the Bank of Russia detailed the inflationary pressure from energy costs:

• Fuel price increases added approximately 0.3 percentage points to consumer price growth in June.
• They contributed an additional 0.2 percentage points in the first half of July.

The central bank noted that it expects the total direct and indirect impact of higher fuel prices on full-year inflation will not exceed 1.5%.

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Supply Disruptions and Market Response

The price hikes followed widespread fuel shortages across Russia's 11 time zones, which were triggered by Ukrainian drone strikes on multiple oil refineries. These disruptions led to long lines at gas stations, rising pump prices, and rationing measures in several regions. Russian authorities have since stated that the supply situation has stabilized in many areas.

Monetary Policy Outlook

The report comes after the Bank of Russia cut its benchmark interest rate to 14% from 14.25% on July 24. The central bank cited the need to respond to an inflation spike caused by the attacks on refineries and e-commerce warehouses. Looking ahead, most board members indicated at the July meeting that there is still room for further rate cuts this year, though they also noted that the scope for additional easing has narrowed.