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CPI daily growth slowed as of 3 June

Yesterday, Rosstat released its weekly CPI report for 28 May-3 June. The average daily growth in consumer prices slowed to 0.019%, from 0.024% during the last week of May (similar to the 0.019% during the respective week in 2012). The main CPI driver remained the growth in prices of fresh vegetables, in particular potatoes (4.4% WoW vs. 3.9% WoW a week ago) and cabbage (2.8% WoW vs. 3.8% WoW). Gasoline prices deflated a mere 0.1% WoW last week, following three weeks of zero growth.

The inflation report suggests that the CPI added 0.06% over 1-3 June (vs.0.08% in 1-4 June 2012) with daily growth slowing from last week and matching last year’s reading. Importantly, the similar average daily prices growth in June this and last year de facto implies YoY deceleration, as in June 2012 actual growth reached 0.9% MoM (despite the weekly CPI reports showing 0.5% MoM growth).

We note that the favourable base effect in fruit and vegetables continued to intensify: this was the second week with lower fruit and vegetables prices growth compared with the respective period in 2012 (1.8% WoW vs. 3.6% WoW). In our view, vegetables prices are to increase more and more modestly in the weeks to come. That, coupled with the abnormal intensification in vegetable prices growth last year, will likely lead to strong headline disinflation. Hence, we expect the headline CPI to come in at 6.8-6.9% YoY in June 2013.

Maxim Oreshkin, Daria Isakova
VTB Capital analyst

CPI, Rosstat

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