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CPI added 1.24% in 1-30 July


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).

The pick-up in food prices (ex-fruit and vegetables) continued last week and might be partly due to the problems with this year’s harvest. This could well continue in the coming months. At the same time, the fruit and vegetables prices trend has reversed with the start of seasonal deflation. However, the usual seasonal deflation for vegetables is likely to be much milder than last year, pushing YoY growth rates higher.

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).

Maxim Oreshkin
VTB Capital analyst

CPI, Rosstat, CBR

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