Russia's inflation rate is forecast to temporarily exceed the targeted level of 4 percent next year due to the increase in the value-added tax (VAT), the central bank said Friday.
"This increase will have a one-off effect on price dynamics," it said in a statement, adding that the annual consumer price growth rate will return to 4 percent in early 2020.
Russia's State Duma, or lower house of parliament, passed a bill on Tuesday to raise the VAT to 20 percent from the current level of 18 percent, starting next year.
To become effective the bill has to be endorsed by the Federation Council, the upper house of the parliament, and then signed into law by President Vladimir Putin.
The central bank said the inflation rate stood at 2.3 percent in June and was expected to remain in the 2.5-2.6 percent range in July in line with its forecast.
However, in spite of inflation remaining below the target this year, "a majority of annual inflation indicators reflecting the most sustainable price movements" suggests it is tending to return to 4 percent, the bank said.
The bank forecast Russian consumer prices will grow by 3.5-4.0 percent this year.
It decided to keep its key lending rate unchanged at 7.25 percent since March and also kept its forecast for the country's gross domestic product (GDP) growth this year at 1.5-2.0 percent.
