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Weekly CPI – annual inflation continued to gather pace, and hit 6.6% of 24 March

According to Rosstat, CPI growth reached 0.75% during 1-24 March. Over the last week, average daily price growth slightly softened to 0.029% (vs. 0.034% a week ago), staying well above levels observed in March 2013. Component-wise, inflation this week was led by gasoline and sugar prices (+0.6% WoW and 2.0% WoW, respectively), while price gains in potatoes (+1.8% WoW) and vodka (+0.9% WoW) were among second-tier drivers.

Fruit and vegetable prices kept decelerating and now slowed right up to the level that we saw in March 2013. It is also positive that sugar and vodka prices started to slow last week, which that could translate into a full-scale downward trend, as the upward pressure from a weaker rouble and geopolitical tensions, as well as from the hike in the minimum vodka price on 11 March, respectively, are temporary and thereby will likely to fade in weeks to come.

Gasoline was the key driver of weekly inflation for the first time since August 2013, but we are still convinced that the recent pick-up in gasoline inflation could well stem from the sharp rouble sell-offs earlier this year. So until such a time when a new wave of turbulence hits the rouble, we believe a long-lasting upward move in gasoline prices is unlikely.

We maintain our view that the MoM consumer prices gain might reach 0.9% this month, given an average daily price growth at near 0.029% during the last week of March. In this case, the full-March headline CPI would show an increase in annual growth to 6.8% YoY, the highest since June 2013.
Vladimir Kolychev, Daria Isakova
VTB Capital analyst

CPI, Rosstat

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