Russia's weekly inflation remained stable at 0.2% w/w on the week to February 1, bringing annual inflation rate to below 10% in the first month of 2016, according to estimates based on  data release of the Rosstat state statistics office on February 3.

The Central Bank of Russia (CBR) issued a hawkish statement the previous week warning that the monetary easing of 2015 could be rolled back if renewed oil price and ruble volatility compromise planned inflation curbing. Meanwhile, inflation has become the fastest growing concern for Russians.

Using Rosstat data, Gazprombank analysts on February 4 estimated that the 12-month average CPI has slowed to 9.5% y/y, while Sberbank CIB said annual inflation stood at 9.9% as of February 1.

Both estimates are in line with the recent forecast of the Economy Ministry that inflation will moderate to below 10% in January.

"The key rate [of 11%] is now above the current inflation rate for the first time since January last year," Gazprombank noted in its comments. However, the deceleration of inflation is mainly attributable to the base effect, which will fade away by the end of the first quarter, it warned.

The exhaustion of the positive base effect and lagged ruble devaluation effect could trigger a short-term spike in inflation in the second quarter, the bank forecasts, seeing CPI likely rising 1pp from 9.3% y/y to 10.3% y/y in April-June.

Sberbank CIB models a scenario in which February's m/m inflation will remain close to January's 0.9% m/m as reported by Rosstat. This would push inflation down to 8.6% y/y in February, making the annual inflation forecast of under 9% realistic. (The Economy Ministry currently forecasts 8.5% y/y inflation in 2016).

"The most crucial factor for disinflation, however, is the stability of the oil price, as the CBR has already found the optimal approach to monetary policy and has reduced FX volatility," the investment arm of Russia's largest bank stresses.