CPI advanced to 6.9% YoY as of 22 October
According to Rosstat, CPI increased 0.51% on 1-22 October and added 0.18% last week. The average daily price growth advanced to 0.025% during the reported period (16-22 October) from 0.019% in the previous week, but was higher than the 0.016% for 18-24 October last year. The detailed breakdown shows that the main growth drivers were flour (+1.5% WoW), sunflower oil (+1.2% WoW), eggs (+0.6% WoW) and millet (+0.9% WoW), as well as heating (+0.3% WoW). Meanwhile, the growth in gasoline prices decelerated to 0.3% WoW, from 0.6% WoW during the previous week, while fruit and vegetables deflation weakened a bit further to -1.1% WoW, from -1.2% WoW over the previous week.
Last week, CPI growth strengthened again after a week of deceleration, resulting in a YoY reading of 6.9%. We expect full-month CPI for October to come in at 0.7-0.8% MoM and 6.8-6.9% YoY. Rising inflation is putting additional pressure on the CBR to continue to tighten its monetary policy. We are sticking to our forecast of another 25bp hike in November, but see a high risk that the rate will not change. The full-month CPI report for October (to be published on 6-7 November) will likely shed more light on the source of CPI acceleration: whether it is purely a result of supply-side shocks or driven by demand-side and inflation expectations.
Maxim Oreshkin, Daria Isakova
VTB Capital analyst
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