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Weekly CPI shows that YoY headline CPI ticked down to 7.3%

Yesterday, Rosstat released its weekly CPI report for 4-10 June. The average daily growth in consumer prices slowed to 0.015%, from 0.019% during the previous week (vs. 0.028% during the respective week in 2012). The main driver remained the growth in fresh vegetable prices, in particular potatoes (4.5% WoW vs. 4.4% WoW a week ago) and cabbage (2.2% WoW vs. 2.8% WoW). Gasoline prices stayed unchanged after a week of deflation.

The inflation report suggests that the CPI added 0.16% over 1-10 June (vs. 0.22% in 1-9 June 2012) with daily growth continuing to slow (which implies YoY disinflation to 7.3%). Importantly, the similar average daily price growth in June this and last year de facto imply a 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 third week with lower fruit and vegetables prices growth compared with the respective period in 2012 (1.3% WoW vs. 4.2% WoW). In our view, vegetables prices are set 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, gasoline

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