According to Rosstat, CPI in the first four days of June reached 0.08%, with daily price growth at 0.019% (compared with just 0.010% for the same week last year). The key drivers of weekly price growth at the beginning of June were vegetables (+3.6% vs. -1.6% during the same week a year ago) and public transport (slightly below +2.0% this year vs. +0.4% last year).
We expect weekly CPI growth to cool down in the coming weeks as the increase in public transport prices is a one-off event. At the same time, food prices (especially on vegetables) are set to continue growing fast, while core inflation will likely be supported by strong internal demand dynamics and a weaker RUB. As a result, we see June CPI reaching 0.5% MoM and pushing the YoY CPI growth rate to 3.9% (from 3.6% YoY in May), starting an upward trend with a target of 7.0% by year-end.