"Cucumber rally" moderates Russian weekly deflation to 0.03%

Inflation in September was driven by a spike in cucumber prices but overall continues to fall. / bne IntelliNews
By bne IntelliNews September 16, 2022

Russian consumer prices for the week ending September 12 deflated by 0.03% week on week, with deflation moderating from 0.13% seen in the previous week, according to the latest RosStat data. It estimated that annual inflation slowed from 14.08% to 14.06% on the reporting week. (chart)

Notably, the main contributor to the slowdown in price reduction was cucumbers, with the price of the vegetable rising by 8.4%, causing the price of all fruit and vegetables to fall by only 1.6% (while potatoes seasonally fell in price by 5.17%). In addition, the prices of airline tickets kept on rising, by 3.65% over the week. 

Amid the “cucumber rally” The Bell reminded that many analysts previously criticised RosStat for the heavy weightings of vegetables in inflation calculations. Should the rising prices of vegetables and flights be excluded from the calculations, deflation remained in the 0.07-0.09% range for the past three weeks, which means the deflationary trend is not over yet.

Inflation is in focus as the Central Bank of Russia (CBR) is expected to keep cutting the key interest rate in the policy meeting of September 16, bringing it down from 8% to 7.5%.

The analysts cited by The Bell believe that the CBR has no particular reasons to react strongly to the latest weekly inflation data and maintain the consensus forecast of 50 basis points rate cut at the upcoming policy meeting.

To remind, the government expects annual inflation to moderate into the 12-13% range by the end of 2022, improving the initial forecast of 17.5%.