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CPI weekly: YoY growth edged down to 7.2% as of 24 June


Yesterday, Rosstat released its weekly CPI report for 18–24 June. The average daily growth in consumer prices declined to 0.013%, from 0.016% during the previous week (staying below the daily price growth from the same period a year ago (0.021%)). The main CPI driver remained the growth in potato prices, which advanced to 6.5% WoW vs. 6.2% WoW a week ago. Meanwhile, cabbage prices stated to decline last week.

The inflation report suggests that YoY inflation growth slid to 7.2% (from 7.3% YoY at the end of the previous reported period), with CPI adding 0.36% over 1–24 June (vs. 0.53% in 1–25 June 2012). However, this YoY estimate seems to be too high as similar average daily price growth in June this year and in 2012 de facto implies 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 first week when cabbage prices, which have spurred the headline CPI in the last ten weeks, deflated. In our view, the vegetables prices trend is likely to be downward over coming weeks. That, coupled with the abnormal intensification in vegetable prices growth last year, will likely lead to strong headline disinflation. Hence, we expect headline CPI to come in at 6.9% YoY in June 2013.

Maxim Oreshkin, Daria Isakiva
VTB Capital analyst

CPI, Russia

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