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Weekly CPI – staying level for third consecutive week at 16.7 YoY as of 16 March


Rosstat’s regular weekly CPI report shows price growth reaching 0.5% in the first half of March, while average daily inflation was unmoved at 0.03%. Basket component contributions were close to uniform. Combined contribution to the headline figure from the items observed on a weekly basis in the ‘food excluding fruits, vegetables and vodka’ category stood at 0.03 pp, more than any other broad group.

For the third consecutive week, the headline figure stayed level at 16.7% YoY. However the sequential rate of inflation has been marginally down from 0.23% WoW a week ago to 0.20%. The run rate this week is lower than the respective period of the previous year for the first time since August 2014. Although the magnitude of the difference is still not large enough to affect the headline figure, it provides more evidence that the start of disinflation might be around the corner.

On the whole, the print is supportive of our full-March headline CPI estimate of 17.0% YoY and it is increasingly likely that it might come lower. Policy-wise, the data points to the higher sensitivity of price growth to the growing demand gap or less backward looking inflation expectations than implied by the CBR’s inflation projections. If supported by the March monthly print and in the absence of any unexpected developments, this might tip the balance at the next monetary policy meeting, scheduled to take place at the end of April, in favour of a more front-loaded path of rate normalisation.

Vladimir Kolychev, Alexander Isakov
VTB Capital analysts


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