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Weekly CPI


Rosstat has released its regular weekly CPI report (for 1–7 October). It suggests that for the first seven days of the month, consumer prices added 0.11% (vs. 0.18% during the same period of 2012). The average daily growth in consumer prices increased to 0.016% during the reported period, from 0.008% in the previous week.

The recent weekly CPI report implies that the annual growth in consumer prices slowed to 6.0% by 7 October. In other words, it exactly matched the upper boundary of the CBR’s target range for this year. However, it is unlikely to alter the regulator’s on-hold stance at the next monetary policy meeting (on 14 October) as policymakers have been calling for milder inflation expectations in recent times (taking into account next year’s target of 5.0% YoY, in our view).

Nevertheless, the acceleration in the weekly CPI was slightly higher than expected, as the increase in the price of eggs (+3.4% WoW, a more than two-year high) and dairy products gathered pace. Also, the growth in potato prices returned to the black, while the seasonal deflation in certain other vegetables continued to dissipate: fruit and veg deflation slowed to -0.6% WoW, the slowest price contraction since mid-July 2013. Furthermore, we note the heating tariff indexations on 1 October (similar to last year, so almost neutral for the YoY reading).

We suggest that lower production costs will finally filter through into the real economy, being just a question of ‘when’ rather than ‘if’. Hence, we are retaining our view that there is to be strong disinflation ahead, with the full-October CPI reading sliding to 5.8% YoY, implying some modest upside risks to our YE13 forecast of 5.4% YoY.

Daria Isakiva, Vladimir Kolychev
VTB Capital analyst


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