According to Rosstat, CPI growth for 1–30 July reached 1.24%. During the reported period (24–30 July) prices rose 0.05%, with average daily price growth slowing to 0.007% from 0.031% in the previous week (well above deflation of 0.014% on 25–31 July last year). We believe the key driving forces behind CPI this week were regulated tariffs (+0.2–0.7% WoW) and food prices (fruit and vegetables prices — 0.7%, sugar +0.8%, flour +0.5%, and chicken +0.6% WoW).
We forecast price growth of 5.7% YoY for the whole of July. We expect no change in base interest rates, but we do think there will be a more hawkish statement in August (the next CBR’s policy meeting is likely next week). Our base case implies a 50bp hike in key rates this year (by 25bp in September and October).