This week, Rosstat is to release its monthly CPI publication for May (4-5 June). We also have the fresh set of PMIs (manufacturing on Monday and services on Wednesday) as well as the regular weekly CPI report.
Coming up on 7 June is the deadline for President Vladimir Putin’s request to each minister to produce detailed on-the-record plans of how to achieve the goals set in his decrees. Also, the regular meeting of the CBR’s Board of Directors on monetary policy might be held this week (it is scheduled for the first half of June).
We do not expect any positive surprises in the headline CPI data for May (our forecast is 7.2% YoY, similar to the April reading, or there might even be a pickup to 7.3% YoY) as the earlier acceleration in vegetables prices postponed disinflation until June. However, we might see some moderation in core inflation measures as RUB remains quite resilient and the economy continues to be sluggish.
Economic data remains weak, but April’s dataset was not bad enough to make a cut in the repo rate unavoidable. We still see a high chance of a 25bp cut in all rates at the next monetary policy meeting, but this will only happen if the regulator is more forward-looking. Also playing a role is the fact that the June decision will be the last prior to Elvira Nabiullina taking charge of the regulator.
Weekly CPI. We expect the favourable base effect in vegetable prices growth to intensify further, finally pushing the headline CPI lower.