Russia's consumer price inflation posted 0.4% month-on-month in December 2019, translating into a 2019 full-year CPI of 3% year-on-year versus 4.3% y/y seen in 2019, according to the preliminary estimates of the Rosstat statistics agency.
In December food inflation reached 0.7% m/m in and 2.6% for the full year, while non-food inflation reached a respective 0.1% and 3%. Services inflation came in at 0.2% m/m in December and 3.8% in 2019.
"We expect y/y inflation to continue slowing at the beginning of this year as the high base caused by the VAT hike in January 2019 will evaporate," Sberbank CIB commented on January 9.
Uralsib Capital analysts on January 9 also noted that given the exhaustion of the high base effect, annual inflation is expected to moderate to 2.5-2.7% in January, while projecting the 2020 inflation at 3.3%.
Sberbank CIB expects inflation slowing to 2.5% y/y by the end of 1Q20 before recovering slightly. "Although we project a pickup in economic growth this year (to 2%), household consumption will likely expand only modestly again and not exert significant pressure on prices, so we think inflation will end this year at around 3% again," the bank argues.