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Daily CPI slowed last week


According to Rosstat, CPI growth reached 0.13% during 5-11 February (bringing the YTD print to 1.2%). Over the reported period, average daily price growth edged down to 0.018%, from 0.029% in the previous week (slightly above the 0.017% for 7-13 February last year). The key driving forces behind CPI growth this week were almost the same (in order of importance) vodka (+1.1% WoW), potatoes (+1.0%), gasoline (+0.2%), cabbage (+1.0%), and bread (+0.7% WoW).

Meanwhile, fruit and vegetable prices decelerated slightly, adding 0.6% WoW vs. 0.8% during the previous week.

It is worth noting that chicken prices were down (-0.5% WoW) for the fifth week in a row. 

The recent reading implies that headline CPI has stayed at 7.1% YoY as of 11 February. Weakening in the second round effect of the hike in minimum vodka prices and in gasoline excises, as well as slower growth in fruit and vegetable prices, dragged the average daily price growth down last week.

We are estimating the full February reading at 0.4-0.5% MoM and 7.1-7.2% YoY (vs. 1.0% MoM and 7.1% YoY in January), which will likely mark the highest level for CPI in 2013. Meanwhile, the downward trend in core inflation could well persist, in our view, and therefore we see headline CPI slowing towards 5.3% YoY eop-FY13 (under a USD 110/bbl scenario).

As far as the CBR’s policy is concerned, and given that February’s statement was a bit less dovish, we believe that the regulator will watch inflation risks closely. At the next policy meeting, the monetary authorities are likely to say that CPI has reached its peak and that there are still pass-through risks, while economic risks are growing. Later, in April, we shall probably see the first easing step and more focus on growth risks rather than inflation as the YoY expansion in headline CPI is set to start decelerating in March and the growth of the economy to stay cool. 

Maxim Oreshkin, Daria Isakova, Dmitri Fedotkin
VTB Capital analyst

CPI, dollar, CBR, Rosstat

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