Rosstat has released its regular weekly CPI report (for 15-21 October). It implies that for the first 21 days of the month, consumer prices added 0.40% (vs. 0.48% during the same period of 2012). The average daily growth in consumer prices advanced slightly to 0.023% during the reported period, from 0.018% in the previous week. The acceleration in the weekly consumer inflation was mainly triggered by price rises speeding up on eggs (to 5.9%, from 4.6% a week ago), potatoes (to 2.9%, from 2.7%) and cabbage (to 0.1%, from -0.5%).
Elevated inflation (the annual growth in consumer prices stood at 6.0% as of 21 October, on the upper boundary of the CBR’s target range for this year) can mainly be explained by the poor potato harvest (as with other vegetables, but to a smaller extent) owing to heavy rains at the beginning of autumn. By last Monday, potato prices had added a substantial 7% from 30 September (to recap, during October 2012 potato prices were printing deflation). In annual terms, this will likely imply an additional 0.1pp to headline inflation this month. We are therefore revising our forecast for October up to 6.1-6.2% YoY (vs. 6.1% YoY in September), despite persistently slowing core inflation.
Vladimir Kolychev, Daria Isakova
VTB Capital analyst
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