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Weekly CPI – inflation flat at 7.4% YoY as of 11 August

Rosstat reports that weekly CPI was 0.04% WoW over the last week, with average daily inflation slowing to 0.002% from 0.007% in early August. Component-wise, the increase in vodka (0.7% WoW), chicken (0.8%) and gasoline (0.2%) prices were the key inflation drivers last week, while deflation in vegetables cemented further, with WoW drops in potatoes and tomatoes of 8.8% and 7.2%, respectively.

The food import restrictions imposed on 7 August took centre stage in investigating the recent weekly CPI, although last week there was little evidence of companies raising prices. This comes in line with our initial view that the restriction-led inflationary impact would likely become visible with a several week lag, and thereby August inflation is in a rather safe position. Looking into the autumn, we believe that meat, fish and milk-related goods will likely be the first to reflect a price shock, while the fruit and vegetable part of the CPI basket seems to be relatively immune to the food ban for the time being thanks to a strong local harvest and a beneficial geographical diversification of importers.

Otherwise, this week’s release was the same story: progressing fruit and vegetable deflation, favourable tariff policies and rising vodka prices. Since mid-July, deflation across vegetables and a slower tariffs upturn have shaved some 0.1pp each from the annual headline inflation.

We expect a 0.0% MoM gain for the full month, which would translate into a 7.3% YoY end of summer print.

Vladimir Kolychev, Daria Isakova
VTB Capital analyst


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