Page 36 - RusRPTSept19

demonstrating that price growth is running well below the official 4% inflation target.
Russia's low inflation and sluggish economic growth serve as arguments for the CBR to cut the key rate in September despite the ruble's depreciation in early August due to geopolitical tensions.
4.2.2 PPI dynamics
Russia’s producer price index of inflation (PPI) continues to fall, dropping to 1.1% in July, down from 4.4% the month before. PPI is well down on the first quarter when it rose to over 15% on the back of rising fuel costs.
The fall in PPI is partly due to a three month slowdown in manufacturing as orders slow and producers lay off workers.
4.3 Industrial sectors and trade 4.3.1 Producers PMI
Russia’s services PMI bounced back in August from just treading water in July and lifted the composite index result, IHS Markit said in its latest data release on September 4. The services PMI came in at 52.1 in August, up from 50.4 a monthly earlier, which was only just above the 50 no-change mark.
The service PMI result follows from the manufacturing PMI release two days earlier that improved a little but still posted 49.1 in August, which represents a mild contraction in manufacturing.
Taken together the over composite index was lifted by the recovery in services to post 51.5 in August, up from the almost flat 50.2 recorded in July.
Weighing on the headline PMI was a stronger contraction in new orders in August, reports Markit. “The solid fall in new business was reportedly due to weak demand conditions and the loss of key clients. Moreover, external demand was further reduced, as new exports orders fell at the sharpest pace for almost three years,” Markit said in a note.
While the positive results are welcome, the poor performance of
36 RUSSIA Country Report September 2019 www.intellinews.com