MOSCOW—Prime Minister Dmitry Medvedev warned that Moscow has no money available to raise pensions further in line with last year's high inflation rate, news that is likely to be unwelcome ahead of parliamentary elections in September.

"We don't possess enough resources to carry out [an] extra pension adjustment," Mr. Medvedev said Tuesday at a meeting with government officials.

The cost of living has skyrocketed in Russia in recent months, driven by a massive drop in the ruble's value and the government's ban on Western food imports. In 2015, consumer prices rose 12.9%, the highest annual increase since 2008. But Russia's government has only increased pensions by 4% since the start of this year.

Moscow has often raised pensions to offset inflation. In a country with an aging population, retirement incomes are seen as a key factor in maintaining social stability. The number of pensioners increased by more than 15% in the past two decades.

Members of United Russia, the ruling party, had raised expectations of another pension increase this year ahead of the September elections. But Mr. Medvedev, the party leader, dashed such hopes Tuesday.

He said pensioners, whose annual average monthly payment is around $187, will receive a one-time payment of 5,000 rubles ($77) in January. Pensioners will still receive an increase in their payments to reflect this year's inflation, Mr. Medvedev said. But that figure, likely to be around 6%, would be the lowest since 1991.

Denis Volkov, a sociologist at independent pollster Levada Center in Moscow, said the prime minister's statement was unlikely to affect United Russia's public approval ratings less than four weeks before the elections, although it could become an issue in campaign debates.

The pension news may be good for the broader economy, however. In the absence of new inflationary risks, the central bank may have room to cut lending rates.

"The decision is favorable for monetary easing. It will be among arguments for a rate cut in September," said Stanislav Murashov, an analyst at Raiffeisen Bank in Moscow.

Uncertainties remain for central bank policy. Mr. Medvedev said federal budget revenues had fallen because of the sustained drop in oil prices, so the country's budget deficit would exceed 3% of gross domestic product—a ceiling set by President Vladimir Putin.

So far this year, the price for a barrel of oil, Russia's key export, has averaged $40, far below levels of $100 and higher that Russia received in the past decade.

More unpopular measures by the government may follow the 2018 presidential elections. Government officials told The Wall Street Journal that Moscow is considering raising income taxes as it is running out of money to fill budget gaps.

Write to Andrey Ostroukh at andrey.ostroukh@wsj.com

(END) Dow Jones Newswires

August 23, 2016 20:35 ET (00:35 GMT)

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