Kazakhstan's manufacturing remained under pressure in May, PMI data shows
22 hours ago
Russia's deflationary trend continued in Russia in August exceeding expectations of authorities and analysts, with month-on-month CPI posing -0.5%, showing the first monthly deflation since August 2011.
In year-on-year terms this brought CPI in August sharply down to 3.3% from 3.9% y/y seen in July, leaving little doubt that inflation-minded Central Bank of Russia (CBR) will comply with the 4% inflation target in 2017.
August's reading exceeded the expectations of analysts (3.7% y/y forecasted in Reuters analyst survey) and the authorities (3.4% y/y forecast by the Ministry of Economic Development).
The trend appears solid, as core inflation remained muted at 3% y/y and 0.1% m/m in August, while food inflation moderated significantly.
Notably, the CBR will hold the next policy meeting on September 15 and is broadly anticipated to resume the monetary easing cycle which was paused in July due to surprise spike in inflation, expected currency movements, and increased external uncertainty.
After the positive surprise with August inflation analysts surveyed by Reuters revised their expectations from the meeting from 25bp key interest rate cut to 50bp reduction. The key interest monetary policy rate is expected to be cut from current 9% to 8%-8.5% by the end of the year.
The CBR officials did not yet provide any guidance prior to the meeting, but the regulator's press-service commented to Reuters saying that August "deflation exceeded expectations" and expressing confidence that 2017 inflation reading will be within the target.
Nevertheless, some risks are still seen in the food segment, given the high volatility of fruits and vegetables prices and the upcoming harvest season, the CBR said.
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