First Deputy Chairman of the CBR Alexey Ulyukaev has announced that inflation in April this year will not exceed inflation in April 2011.
Monthly inflation in April 2011 stood at 0.4% MoM. A similar reading in April this year would imply an annual rate of 3.7-3.8% YoY (i.e. Almost unchanged from 3.7% YoY in March).
We expect CPI to stay around this level until July and see it at 7.0% YoY by the end of 2012. The CBR has recently become rather concerned about inflation in 2H12, as there is significant uncertainty about the effect on prices from the planned hike in regulated tariffs and about food prices. The CBR is likely to stay on hold until the summer and keep liquidity conditions sufficiently tight.