CPI inflation in Russia in October accelerated to 6.3% y/y and 0.6% m/m vs. 6.1% y/y and 0.2% m/m seen in September, according to the report by RosStat. Inflation rate was moderating since hitting 21-month high at 7.4% y/y in May and was expected to continue to converge to Central Bank of Russia’s (CBR) target of 5%-6%.
October’s inflation acceleration did not comply with these expectations. Price growth accelerated in both m/m and y/y terms on most part due to food inflation. As of end of October ytd inflation rate was 5.3%.
Since the beginning of H2/13, the CBR that was previously expected to come up with monetary stimulus toughened its stance. Inflation curbing and transition to inflation targeting by 2015 was repeatedly stressed as the main priority of the central bank. Monetary stimuli at this point would contribute to price growth, rather than to closing the existing output gap, head of the CBR Elvira Nabiullina argued in September.
Although the wording of previous October’s CBR press release led analysts to believe that the CBR leaves a window for changing the main interest rates in November or December, the latest inflation data makes this more unlikely.
| CPI inflation, y/y | Dec-08 | Dec-09 | Dec-10 | Dec-11 | Dec-12 | Jan-13 | Sep-13 | Oct-13 |
| TOTAL | 13.3% | 8.8% | 8.8% | 6.1% | 6.6% | 7.1% | 6.1% | 6.3% |
| Food | 16.5% | 6.1% | 12.9% | 3.9% | 7.5% | 8.6% | 6.3% | 6.9% |
| Non-food | 8.0% | 9.7% | 5.0% | 6.7% | 5.2% | 5.1% | 4.7% | 4.5% |
| Services | 15.9% | 11.6% | 8.1% | 8.7% | 7.3% | 7.8% | 7.8% | 7.7% |
| Source: RosStat |
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