Industrial PPI of 1.9% y/y and 1.4% m/m is reported for September by RosStat. In both y/y and m/m terms producer prices growth declined notably as compared to 4.6% y/y and 2.8% m/m seen in August. Previously in H1/13 overall producer prices grew by 3.5% y/y.

The data is in line with previous PMI indexes that showed low price pressures on manufacturers and service providers and stagnating industrial activity. Manufacturing PPI went down to 0.7% m/m and 1.4% y/y in September vs. 1.7% m/m and 2% y/y in August.  

Slowing PPI also supports the Central Bank’s of Russia (CBR) confidence that consumer price inflation is going to meet the target of 5%-6% by the end of the year. CPI was estimated by the central bank at 6% y/y as of October 6.

CPI inflation in September 2013 remained moderated to 6.1% y/y and 0.2% in m/m terms, according to the report by RosStat. Previously in July and August inflation stayed unchanged at 8-month low 6.5% y/y. In May, annual monthly inflation hit 21-month high at 7.4% y/y.

At the same time for 2014, the CBR increased its inflation target for 2014 from previously set 4.5% to 5%. In a revised monetary and credit policy guidelines for 2014-2016 the CBR notes that government’s decision to increase the utilities tariffs for households in 2014 makes the previous 4.5% inflation target unfeasible. Complying with the target is not possible without tougher monetary policies which would endanger already weak growth, the CBR argued.