According to Rosstat, CPI growth reached 0.15% during 15-21 January (bringing the YTD print to 0.57%). Over 15-21 January, average daily price growth edged down to 0.021%, from 0.028% in the previous week (and was below 0.025% for 17-23 January last year). The key driving forces behind CPI growth this week were almost the same (in order of importance) vodka (+1.9%), potatoes (+1.6%), central heating (+0.4%), cabbage (+2.9%), and gasoline (+0.2%). Meanwhile, fruit and vegetable prices decelerated slightly, adding 1.4% WoW vs. 1.8% during the previous week.
The recent reading implies that headline CPI has stayed at 6.8% YoY since 21 January. Weakening in the second round effect of the hike in minimum vodka prices and slower growth in fruit and vegetable prices dragged the average daily price growth down slightly last week (despite some acceleration in prices for heating). We retain our full-January reading estimate at closer to 0.9% MoM and 7.0% YoY (vs. 0.5% MoM and 6.6% YoY in December). In addition, core inflation is likely to persist on its downwards trend, in our view, and therefore headline CPI will likely slow towards 5.4% YoY eop-FY13.
As far as the CBR’s policy is concerned, we see January’s pick up in headline CPI growth rates as the only obstacle in the CBR’s way to start easing monetary policy, as economic growth is weak and bank lending is on the downward trend. We expect monetary policy makers will make the first monetary policy easing step in March-April.
Maxim Oreshkin, Daria Isakova
VTB Capital analyst
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