According to Rosstat, CPI growth reached 1.9% during 1-24 February. Over the reported period, the average daily price growth was 0.077%, the same as in the previous week.
The CPI growth this week was driven by non-food items, especially, cars (+2.6% WoW), but also by some food items, which stayed roughly similar to the previous period: black tea (+2.1% WoW), frozen fish (+2.0%), rice and onions (+1.7%).
The current weekly inflation report paints a peculiar picture. While most of the components grew at an equal or lower rate, with downward pressure coming from fruits and vegetables (as a group they were down 0.27% WoW), the headline rate has accelerated driven by non-food items and items that are not observed on a weekly basis but are estimated by Rosstat. We estimate the contribution of the latter at 0.45pp. Such spikes are characteristic of the last weeks of a month, when the statistical agency has most of the data for the monthly headline figure and tries to bring the weekly data in line with the monthly print by adjusting the ‘unobserved’ component of weekly inflation.
We think the full-February headline CPI will show annual growth accelerating to 16.6% YoY, with a monthly advance of 2.1%. Looking beyond February, the headline CPI is likely to peak at 17.0-17.2%, driven by the residual pass-through effect, then reverse to a downward trend as the demand gap drags the run rate lower.