Page 42 - RusRPTApr20

4.2 Inflation
4.2.1 CPI dynamics
In February, y/y CPI rate fell further to 2.3% vs 2.4% in January. This matched our and consensus expectations. Food (0.6% m/m and 1.8% y/y) and communal services (0.4% m/m and 3% y/y) were the two drivers while prices of non-food consumer goods did not change last month. Seasonality pushed the cost of fresh vegetables and fruit up by 5.3% m/m, while in the non-food category, the highest increase in prices was recorded for tobacco due to a rise in excise taxes.
Russia’s consumer prices edged up 0.1% in the week to March 2 from virtually zero inflation the previous week. Factoring out 0.03% inflation over the first two days of March from the figure for the week to March 2, monthly inflation likely reached 0.3% in February (given 0.23% inflation in the first 25 days of the month). This means that y/y inflation likely edged down to 2.3% in February from 2.4% in January (though this figure is based on the weekly data and could deviate from the final monthly figure). Average daily inflation rose to 0.015% over the first two days of March from 0.005% in the week to February 25. The first few days of the month are likely to be affected by higher tariffs and other one-off factors. This effect will likely fade over the rest of the month, so we expect inflation to stabilize and reach about 0.3% m/m in March. We expect y/y inflation to climb back toward 3.0% close to the year-end.
4.2.2 PPI dynamics
Producer price index of inflation (PPI) fell slightly to -1.2% in February
from -1 in January, but is expected to fall further as the economy comes to a stand still due to the coronavirus.
42 RUSSIA Country Report April 2020 www.intellinews.com