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Weekly CPI – annual CPI ticked up to 6.3% as of 25 November

Rosstat has released its regular weekly CPI report (for 19-25 November). It implies that for the first 25 days of this month, consumer prices added 0.38% (vs. 0.38% during the same period of 2012). The average daily growth in consumer prices remained at 0.015% during the reported period, similar to the previous week.

The weekly CPI structure reveals that disinflation in eggs and deflation in gasoline helped inflation to abate. However, this positive development was completely offset by the WoW tick-up in a range of items.

Even though there are clear signs of positive developments in food inflation (potatoes added 3.4% in 1-25 November vs. 7.5% in October; eggs – 8.7% vs. 18.2%) as well as supportive behaviour from gasoline prices (last week saw a deflation for the first time since June 2013), not disclosed components (such as sausages, lightly smoked salami, tea, apples and TVs) pushed headline annual inflation up to 6.3%.

To elaborate on not disclosed components, on a weekly basis Rosstat conducts CPI polls with a reduced sample of 64 items (vs. more than 470 in the monthly polls); however, the brief CPI weekly alert that is published each Wednesday presents details for only about 30 items. Hence, according to our estimate, these 30 items contributed a mere 0.03% to the 0.11% WoW increase in consumer prices over the reported period, while the rest is due to items that are not presented. It might be a pass-through effect, but we need more details (the full-November CPI report is due on 5-6 December) to draw a final conclusion.

On balance, although food prices are becoming less of an impediment to headline disinflation, it is not enough to abate headline annual inflation: we expect CPI growth of 0.4% MoM and 6.3% YoY this month (vs. 0.6% MoM and 6.3% YoY in October). In the meantime, there are some upside risks to this estimate and we see a low probability of a 6.4% YoY print as well.

Vladimir Kolychev, Daria Isakova
VTB Capital analyst

CPI, Rosstat

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