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Weekly CPI – inflation edged up to 7.5% YoY as of 25 August

Rosstat reports that CPI added 0.20% over 1-20 August, with average daily inflation continuing to creep up: it reached 0.016% vs. 0.007% in the previous week. Component-wise, the increase in chicken (+1.4% WoW), pork (+0.9%) and gasoline (+0.2%) prices, as well as second-round hikes across utility tariffs, were the key inflation drivers last week, while deflation in vegetables kept softening.

In late August, the inflationary impact of the food ban has become more visible, with a broader range of products affected. Barring gasoline and potatoes prices (which cannot be directly linked to the restrictions), there were visible contributions to the acceleration in headline inflation last week from chicken, pork, apples, cheese and eggs prices. However, the total effect from the food ban reached just 0.05-0.07pp and thereby the annual headline inflation crawled up a tick to 7.5% as of 25 August, according to our calculations. We think the headline CPI is likely to end August around 7.5% YoY.

Looking to the autumn, we believe that inflation will remain elevated, fuelled by rising prices for food products on the back of restricted imports, especially meat, fish, dairy and (in late autumn) fruits. Overall, the price inflation on these categories might add about 1.7-1.8pp to the headline CPI in the coming months we estimate.

Daria Isakova, Vladimir Kolychev
VTB Capital analyst


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