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.