Page 31 - RUSRptSept18

being imposed by the US in the autumn have caused the ruble to slide to two year lows against the dollar that will feed through into inflation over the rest of this year.
The Russian authorities has changed thanks to the threat of new US sanctions and have been put on an economic war footing in preparation of more possible shocks.
Ruble-denominated oil prices started to add more visibly in April, with +45.4% y/y, while in June they surged +74.5% y/y. Given that gasoline makes up 4% of the consumer basket, and taking into account the retail price structure, bankers estimated the total effect on consumer inflation in May at about +0.5pp.
However, the basket structures of CPI and PPI are completely different. While, for CPI, Rosstat applies the consumption structure, in the case of PPI, it uses the amount of goods produced. Given this, in a sense the PPI basket is closer to that for IP, with the weight of oil-linked industries in the basket close to 28%. It implies the contribution of oil-triggered inflation at about 11pp out of the +16.1% y/y total growth.
4.3 Industrial sectors and trade 4.3.1 Producers PMI
Russian service sector growth accelerated again in July , picking up momentum from June’s recent low and defying a slowdown in manufacturing in the last three months and just keeping the composite business PMI index in the black.
Total Russian services activity posted 52.8 on the IHS Markit Russian services PMI index , up from 52.3 in June and well ahead of the 50 no-change benchmark score.
However, the increase in services was not enough to outweigh the fall in the manufacturing PMI in July which has dropped for three months in a row and dragged the composite PMI business activity index down to 51.7 in July from 52 in June – still above the 50 no-change mark, but only just.
“The latest figure signalled the weakest rate of overall business activity growth since May 2016, reflecting a decline in manufacturing output,” Markit said in a press release.
31 RUSSIA Country Report September 2018 www.intellinews.com