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Weekly CPI – headline inflation declines to 16.2% YoY


The estimate of average daily price growth has remained unchanged at 0.012% for the first two weeks of May, down from 0.015% in April and 0.029% in May-14. Price trends in individual items have also remained similar to those observed during the previous week with most of the food items’ price growth stable in the range of 0.0-0.3% WoW with familiar outliers (cucumbers and tomatoes (our ‘salad set’) declining 2.6% and 2.1% WoW respectively, while cabbage and carrots (our ‘borsch set’) were up 2.9% and 2.3%). 

The run rate of inflation edged lower to 0.08% WoW (0.12% on the previous week, 0.20% on the comparable week of the previous year). Slowing inflation is driven by the effects of contracting demand (itself due to tighter credit conditions and declining real wages) and the stronger rouble. In the coming months, seasonal factors are set to start putting yet more pressure on the price growth in the fruit and vegetables food category.

In the meantime, we expect that the run rate of inflation will settle around 0.1% WoW for the rest of May, which implies another 0.30-0.36pp drop in the headline this month, yielding a full-May print at 15.8-9% YoY. Thus, two additional monthly inflation reports (for April and May) are set to provide ample evidence of entrenched disinflation and more arguments in favour of further easing at the coming CBR board meeting in mid-June.

Vladimir Kolychev, Alexander Isakov
VTB Capital analysts

CPI, inflation

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