Russia’s CPI inflation up to 6.5% in November, drifting away from CB’s target.

By bne IntelliNews December 5, 2013

CPI inflation in Russia in November accelerated to 6.5% y/y and 0.6% m/m vs. 6.3% y/y and 0.6% m/m seen in October, according to the report by RosStat. Analysts surveyed by Reuters expected inflation at 0.4% m/m in November, EconMin forecasted price growth of 0.4%-0.5% m/m.

Inflation rate in the past two months accelerated away from the Central Bank of Russia’s (CBR) target of 5%-6%, after moderating to 6.1% y/y in September from hitting 21-month high at 7.4% y/y in May.

Same as in October, in November consumer price growth accelerated in y/y terms due to food inflation. As of end of November ytd inflation rate was 5.9% (5.3% as of end of October).

Earlier, at the end of the last month, deputy head of the CBR Ksenia Yudaeva told the press that inflation in 2013 is unlikely to be in the target range of 5%-6%. She believes that inflation will remain at currently posted levels. A number of non-structural factors, such as food prices, are keeping the consumer price growth high, Yudaeva noted.

Also head of the EconMin Alexai Ulyukaev believed that inflation as of end of the year might not comply with the 6% target at 6.1%-6.2%.

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 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 rates remained unchanged in November as well. Bold moves by the CBR are unlikely this year or in the beginning of 2014, especially since the government’s agenda on inflation and economic stimulation remains vague.

CPI inflation, y/y Dec-08 Dec-09 Dec-10 Dec-11 Dec-12 Jan-13 Sep-13 Nov
TOTAL 13.3% 8.8% 8.8% 6.1% 6.6% 7.1% 6.1% 6.5%
Food 16.5% 6.1% 12.9% 3.9% 7.5% 8.6% 6.3% 7.5%
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% 7.9%
Source: RosStat                

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