An upturn in inflation at the beginning of this year was widely expected due to the 17% hike in minimal retail prices for alcohol, the rise in public transportation tariffs (in Moscow, one- and two-trip metro tickets rose 33%) and the seasonal increase in fruit and vegetables. However, the scale of the inflation for 1-13 January was much milder than in 2013 (0.26% vs. 0.39%) and so CPI growth slowed in annual terms to 6.3% YoY. The major beneficial difference was in vodka prices.
We would expect this start to the year to mark the beginning of a disinflation trend on the back of food and tariff inflation converging with the core inflation which itself is likely to remain moderate amid the bleak outlook for domestic demand and softening wages growth.
Given average daily price growth of 0.014-0.018% during the remaining weeks of January as well as an increase in the excise on tobacco and in the tariffs for railway services (these items are not in the weekly CPI sample), we might see full-month CPI growth of 0.6-0.7% MoM, or 6.1-6.2% in YoY terms.