According to Rosstat, CPI growth reached 0.36% during 1-17 September (vs. - 0.1% for 1-19 September last year). Over 11-17 September, the average daily price growth remained at 0.014% (13-19 September last year saw deflation of 0.003%), with the key driving forces almost unchanged: eggs (2.1% WoW), flour (1.2% WoW), chicken (0.7% WoW), bread (0.6% WoW) and the regulated tariff increase (public services (0.5% WoW), water supply (cold at 0.3% WoW and hot at 0.4% WoW), and central heating (0.4% WoW)). In addition, gasoline prices kept rising and increased 0.6% WoW, while fruit and vegetables deflation ticked to -3.0% WoW, from -2.8% WoW in the previous week.
In separate news, First Deputy Chairman of the CBR Alexey Ulyukaev mentioned that CPI might go beyond CBR’s target for 2012.
The overall picture is similar to the previous week: the roughly 3.0% WoW deflation in fruit and vegetables could not offset the price increase in wheat-related products and the hike in regulated tariffs. As a result, headline CPI advanced to 6.4% YoY as of 17 September. We still think that the problems with this year’s harvest will continue spurring inflation in the coming weeks, although the unfavourable base effect is to subside in this and the coming months. Hence, September CPI is to add 0.4% MoM and 6.4% YoY (vs. 0.1% MoM and 5.9% YoY in August), in our view.
We consider Ulyukaev’s comments to be a summing up of the obvious, since CPI has already advanced to 6.4% YoY vs. the CBR’s FY12 estimate of 6.0% YoY and will go only higher later this year (we expect CPI at 7.3% YoY eop-2012).