Russia's inflation up to 3.4% in September, still in check

Russia's inflation up to 3.4% in September, still in check
Consumer Price Index (CPI) inflation in Russia in September remained on an upward trend posting 3.4% year-on-year / bne IntelliNews
By bne IntelliNews October 8, 2018

Consumer Price Index (CPI) inflation in Russia in September remained on an upward trend posting 3.4% year-on-year versus 3.1% seen in August and 2.5% in July, according to the data of Rosstat statistics agency.

Previously as inflation broke out of CBR's forecast of 2.8-3%, while sanction pressure provoked volatility and pressure on Russian assets, the Central Bank of Russia (CBR) surprised analysts by front-loading the monetary policy rate with preventive 25bp hike to 7.5%

But the CBR has surprised the analysts not only with increasing the rate, but also with considerably worsening the inflation forecast, now seeing the CPI in 2018 at 3.8-4.2% (up from 3.5-4%), and for 2019 to 5-5.5% (up by 1pp from previous 4-4.5%). 

In September both non-food and food categories remained under inflationary pressure, with food inflation at 2.5% y/y (up from 1.9% in August), and non-food at 4% (up from 3.8% in August). Services inflation inched to 3.8% from 3.7% in the previous month.

However, current inflationary dynamics are safely within the CBR's revised outlook and make further increase of the key interest rate to 7.5% at the next meeting on October 26 unlikely, the analysts surveyed by Reuters believe. 

The September Reuter analyst survey shows consensus expectations of annual inflation peaking out at 5% in the first quarter of 2019 and moderating to 4% in the first quarter of 2020.

Consumer demand might moderate in the coming months, which should also ease inflationary pressures. The latest Consumer Confidence Index compiled by Rosstat in the third quarter of 2018 dropped by 6pp to -14% on the background of the market turbulence in July-September. 

Data

Dismiss