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Weekly CPI – annual inflation crawled up to 6.9% as of 31 March


According to Rosstat, CPI growth reached 0.97% during the entire of March. Over the last week, average daily price growth slightly advanced to 0.031% (vs. 0.029% the previous week), staying three times higher than levels observed in March 2013 (0.011%). Component-wise, inflation this week was led by sugar and potato prices (+1.2% WoW and 1.1% WoW, respectively), while price gains in gasoline (+0.2% WoW) and vodka (+0.5% WoW) were among second-tier drivers.

The latest weekly print implies monthly CPI has increased 0.97% over the whole of March, which featured 6.9% inflation in annual terms. Component-wise, prices on items that have a track record as major inflation drivers this year — dairy, potatoes, vodka, sugar as well as gasoline — continued to decelerate last week, dragging the headline down. Nevertheless, price gains in some non-reported items progressed, supporting daily inflation near the elevated level of 0.03%.

Looking forward, we expect upward pressure from the weaker currency to persist over 2Q14, keeping headline inflation elevated around 7.0% and spurring core inflation higher into the 5.5–6.0% range (vs. 4.5–4.6% during the previous six months). That said, disinflation is set to come later in 2H14 against a backdrop of new tariff policy, a general economic downturn and muted wage inflation.

Vladimir Kolychev, Daria Isakova
VTB Capital analyst


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