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Weekly CPI – inflation stayed level at 16.7% YoY as of 10 March


Rosstat has published its regular data on CPI growth, which reached 0.3% for the first ten days of March. The average daily price growth shifted a bit lower to 0.03% (vs. 0.04% a week ago). Component-wise, the biggest contribution was due to a spike in local car prices of 1.9% WoW, followed by lamb, which gained 0.7% WoW and contributed another 0.01pp to the sequential run rate of 0.23% WoW.

The headline figure was unchanged from the end of February, printing 16.7 YoY. In the meantime, the sequential rate has stabilised at a higher 0.23% WoW. This is roughly equal to the average run rate of inflation in March 2014, which means that in absence of material shocks the headline number is poised to stabilise around the current levels through the end of the month.

While the contribution of the rise in AvtoVAZ’s car prices, which has trickled down to the headline figure, was significant and added 0.02pp to the run rate, we believe that such price moves are not well supported by demand, as evidenced both by car sales statistics (see our Russian Auto Market - Car sales plummet in February, of 10 March) and marginally negative sequential growth in foreign brand cars, which had previously shown healthy growth propelled by ‘flight from RUB’ purchases. There might still be some pent-up pass-through from FX into retail prices, however we believe that it is likely to run its course over March.

All in all, the published figures support our view that the full-March headline CPI is to stabilise in the region of 17.0% YoY and provides more evidence of further demand-driven disinflation in 2Q15, leading to 11% YoY price growth by the year end.

Vladimir Kolychev, Alexander Isakov
VTB Capital analysts


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