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CPI - October


Yesterday, the full-month CPI report for October was published. Headline CPI accelerated to 6.3% YoY last month, from 6.1% YoY in September, surpassing both our (6.2%) and the Bloomberg consensus expectations (6.1%). The pick-up in vegetables inflation on the back of the harvest season being disrupted by flooding was the main culprit, explaining the entire 0.2pp acceleration in the headline. Surging prices for eggs (29.3% YoY) and dairy products (11.6% YoY) did not help either, but this was partly offset by disinflation across other food items (such as meat and bread).

Meanwhile, Rosstat’s and our core inflation measures remained at 5.5% YoY and 4.5% YoY, respectively.

Headline CPI accelerated to 6.3% YoY in October, staying above the upper bound of the CBR’s target range for this year. The pick-up in food inflation was the main culprit, while underlying core inflation remained well-behaved, symptomatic of the subdued growth environment. And while we admit that the disinflation trend in headline CPI has paused for the time being, we believe it will come back soon and strengthen at the start of next year. Given the CBR’s backward-looking approach, however, elevated food inflation removes rate cuts from the table, at least until next year.
Vladimir Kolychev, Daria Isakova
VTB Capital analyst

CPI, inflation, CBR

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