Page 36 - bne IntelliNews Country Report: Russia Dec17

4.2 Inflation
Russia’s inflation expectations remain volatile. A ccording to the CBR’s survey, the one-year-ahead expected inflation picked up to 9.9% in October (from 9.6% in September). The adjusted estimates of inflation also did not show improvement. The CBR claimed that such situation points out at the persisting volatility of the expectations so far. Also the regulator highlights that 1) people do not believe in the low inflation levels yet (3%) and 2) upcoming seasonal price growth will pose risks of inflation expectation growth in the upcoming months. The rhetoric of the survey seems to be less favourable for a dovish decision at the MPC meeting in December, therefore, the probability of a “hold” decision remains high.
4.2.1 CPI dynamics
Inflation declined in Russia to historic low of 2.7% y/y in October from 3.0% y/y in September, with the food category and the core segment making roughly equal contributions to the slowdown, the state statistics agency Rosstat reported.
Russian Minister of Economy Maxim Oreshkin, says the Ministry of Economy is likely to revise CPI down to 2.5-2.8% y/y by 2017 year-end . The intention was announced after Rosstat published its CPI estimate for October (2.7% y/y). Therefore, MinEco expects 0.4% m/m price growth till year-end. RZB said that the announced revision will not impact the CBR’s policy as the regulator still believes that the current level of inflation is within its target range.
Seasonally corrected inflation was positive for the second month in a row. If prices accelerate to 0.4- 0.5% m/m in the two remaining months of the year, total inflation in 2017 will stand at 2.7-2.8%, in line with the CBR’s revised inflation forecast of “close to 3%”.
While the shifted seasonality in fruits & vegetables guided disinflation in
36 RUSSIA Country Report December 2017 www.intellinews.com