We did not note any major surprises in CPI behaviour in either the past week or the first half of December.
Fruit and veg. prices are gathering some pace in line with their seasonal pattern and do not imply any pressure on YoY inflation. Thus, potatoes remained among key CPI drivers, advancing 1.4% WoW.
Egg price growth has been normalising and last week slid to deflation (-0.4% WoW vs. 2.7% WoW increase this autumn, on average). Partly, this flags that the favourable harvest this year has finally translated into fodder prices.
Otherwise, the behaviour of gasoline prices is also beneficial from the inflation stand point –they are now deflating. For annual inflation, nevertheless, it will not mean much as at yearend 2012 gasoline prices were also in a contraction mode.
Given 0.015-0.016% average daily price growth during the remaining weeks in 2013, we might see full-month CPI growth at 0.5% MoM and 6.4% YoY in December, which would be higher than the CBR’s target for 2013. Over the course of 2014, we continue to expect a pronounced disinflation trend with food and tariff inflation to come closer to core inflation.