Page 34 - RusRPTSept19

In July, crude oil extraction contracted -0.7% y/y, after the +2.8% m/m recovery from the Druzhba incident. Natural gas extraction increased a slight +0.3% y/y, reflecting weakening demand for the commodity in Europe.
Whereas output in mining & quarrying was reported as having increased +3.0% y/y in July, the item level data might seem not to provide evidence for such a relatively strong expansion in the sector: indeed, coal mining was down -3.3% y/y, while crude oil and associated gas (-0.6% y/y) extraction were also in the red in July.
Missing from Rosstat's report is the production of LNG, which has increased at an average of +63% y/y in 2019. A reconstructed index of the visible output of oil & gas products suggests that LNG production is a substantial contributor to oil & gas production growth
According to Reuters, LNG production increased +86% y/y in July. The solid output growth of other items in the mining & quarrying sector also supports the headline growth number: gravel, crushed stone, asbestos and marble have all been in the black recently.
4.2 Inflation
Following the post-Soviet record low inflation levels in 2018, inflation rose to over 5% at the start of this year, but despite a 2pp increase to VAT, inflation has slowed faster than expected this year and is on course to end the year back inside the Central Bank of Russia (CBR) target rate of 4%.
34 RUSSIA Country Report September 2019 www.intellinews.com