According to Rosstat, the CPI increased 0.09% in the first six days of November. The average daily price growth accelerated to 0.015% during 1-6 November from 0.002% in the previous week, and was much lower than the 0.022% for 1-7 November last year.
The detailed breakdown shows that last week’s growth came mainly from flour (+1.0% WoW), sunflower oil (+0.6% WoW), eggs (+0.5% WoW), millet (+0.7% WoW) and heating (+0.4% WoW). Meanwhile, the deflation in fruit and vegetables weakened further to -0.6% WoW (from -0.8% WoW, during the previous week). The growth in gasoline prices was flat last week, at 0.2% WoW.
Last week’s acceleration in prices growth was not a surprise as we had not expected the slowdown in CPI growth during late-October to prove sustainable. The weekly CPI increased to 0.1% WoW, while YoY growth remained stable at 6.5%. Given the weakening fruit and vegetables deflation, other seasonal factors and the persistently tight labour market, we might see full-month CPI growth at 0.5-0.7% MoM and 6.6-6.8% YoY in November. Meanwhile, it is worth noting that in the same week last year prices added 0.15% WoW, meaning that this year CPI growth is running slightly lower than in 2011. This poses downwards risks for our end-year CPI growth forecast of 7.3% YoY.
In terms of the CBR’s monetary policy decision today, soft inflation in recent weeks supports our expectation of no repo rates hike.