The cumulative price growth in March likely totalled 1.0%, half the pace observed in February (2.2% MoM) and a quarter of that in January (3.9%). Average daily inflation remained stable at 0.03%. No observed component gained more than 0.7% WoW, with canned meat, sunflower seed oil, tea and frozen fish becoming 0.5-0.7% more expensive. The downward adjustment has continued in the vegetables category, with the prices of cucumbers down 5.7% WoW and tomatoes dropping 3.4%.
This print proves that it pays to look closer at the weekly numbers. If Rosstat’s figure is taken at face value, it could be interpreted as if the run rate has accelerated 50%, from 0.2% a week ago to 0.3% in the latest data. However, this is not quite the case. Our calculations, based on the average daily inflation, show that the precise run rate has merely gone from 0.224% WoW to 0.254%, with the actual difference being too modest to support any conjecture of price growth acceleration.
After this final print for March, with only one day left outside the scope of the report and the bulk of the data used for the headline already in the hands of Rosstat, it is evident that the full-March print will come at our expected figure of 17% YoY, or slightly below. With tumbling demand and declining consumer confidence, price growth is unlikely to find any firm support this year and on our projections is set to reach 11.0% YoY by the YE.
Policy-wise, if the headline March CPI figure matches expectations, then the CBR will likely have to reconsider its assumption on the stickiness of inflation and speed of adjustment to exchange rate shocks, clearing the way for a more front-loaded path of policy rate normalisation.