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Macro week ahead

This week is to bring more data about inflation dynamics in the CEMEEA universe in December, with CPI releases in Poland and Hungary. In Russia this week there are car sales and the budget balance in December, the weekly CPI reading and Rosstat’s estimate of consumer confidence for 4Q13. In Russia, Turkey, Poland and the Czech Republic statistics on external trade in November are coming out. December’s statistics on non-CIS imports into Russia will likely also be of interest.

Following Russia, Poland and Hungary are due to unveil December CPI this week, which we expect to show inflation significantly below the 2013 target (2.5% in Poland and 3% in Hungary). In Poland, the ongoing economic recovery is unlikely to stoke inflationary risks near term due to still soft labour market and a probable decline in oil prices. So it would support the MPC's on hold stance through the course of 1H14. In Hungary, the growth in headline CPI is artificially retrenched by government cuts in utilities prices, while core inflation has remained strong, running at 3.5% in November.

In Russia, with scarce top tier data to chew on, attention is set to focus on consumer confidence and the preliminary estimate of BoP in 4Q13, as well as some second tier statistics. December car sales are unlikely to add much cheer, but we expect the pace of decline to moderate. Consumer expectations in 4Q13 have been deteriorating given the Services PMI sub-index, so Rosstat’s measure of household mood will likely also show some weakness. Non-CIS imports in December could well have declined further on the back of meagre domestic demand. Meanwhile, the weekly CPI report might be interesting to watch over public transportation tariffs (in Moscow, one- and two-trip metro tickets up 33%), vodka prices (a 17%-hike in the minimum retail price) and further evidence of food disinflation in YoY terms. All in all, we see a YoY inflation slowdown kicking off already this month.

Vladimir Kolychev, Darya Isakova
VTB Capital analyst

CPI, Russia

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