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Weekly CPI – weekly rate falls to 0.12% WoW


The sequential rate of price growth slowed to 0.12%, which is the slowest rate registered for the second week of April in three years. Average price growth in the first half of month is also down, to 0.022% compared to 0.039% in March. Fruits and vegetables continued to drag the headline figure, declining 0.3% WoW, with cucumbers losing 2.4%, apples down 0.7%. The most pronounced growth has been observed in the same trio of black tea (+0.8% WoW), frozen fish (0.7%) and canned meat (0.6%) as the previous week.

Headline price growth has declined for the first time since mid-2014. The prevailing volatility of macroeconomic data renders it hard to neatly disentangle the contributions of declining demand and the stronger exchange rate to lowering inflation, while both contributions are certainly highly visible. Anecdotal evidence suggests that food items are the fastest to respond to the exchange rate volatility, with a number of retailers already announcing their intentions to renegotiate the terms with the suppliers. It should be noted that the fastest adjustment is in items that are imported by the retailers directly and have a short shelf life, which include fruits and vegetables, fish.

Looking ahead, we expect the sequential rate to remain below 0.2% WoW, as residual pent-up pass-through effects, such as the current tea price spike, expend themselves. Policy-wise the deceleration of the run rate is markedly dovish and if proven sustainable by the two coming weekly prints will provide strong support for a more front-loaded path of interest rate normalisation.

Vladimir Kolychev, Alexander Isakov
VTB Capital analysts


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