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Headline CPI at peak of 7.3%


According to Rosstat, CPI was reported at 0.6% MoM and 7.3% YoY in February (from 1.0% MoM and 7.1% YoY in January), above our expectations of 7.2% YoY. Importantly, services tariff inflation shot up last month, spurred by more expensive passenger transportation (12.0% vs. 9.6% a month ago) and travelling abroad (5.8% YoY vs. 4.3% YoY). Also food inflation advanced on higher prices for alcoholic beverages, while non-food inflation edged up mainly owning to an acceleration in the growth of gasoline prices (to 9.2% YoY from 7.8% YoY in January). At the same time, core inflation remained at 5.7% YoY for the third month in a row.

The February inflation report came as a surprise. First, headline CPI moved up mainly on a jump in services prices (particularly passenger transportation) and the second round effect of the hike in minimum prices on vodka. Second, VTBC core inflation edged up, but mainly owing to higher prices on foreign tourism, which we treat as a one-off. Third, core inflation remained unchanged which provides an additional argument for the CBR to focus more on economy risks at its March policy meeting. We expect February’s reading to mark the peak for 2013.

Maxim Oreshkin, Daria Isakova
VTB Capital analyst

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