Page 41 - RusRPTJul20

As no significant upside potential is seen remaining for ruble, while the autumn harvest outlook is less upbeat due to dry weather in Russia's southern regions, BCS GM believes that annualised inflation will start growing again from June onwards and forecasts a CPI rate of 4.2% year on year for 2020.
Sberbank CIB on June 8 also forecasts the y/y price growth to accelerate in the following months, but expects it to pick up only moderately and finish the year close to 3.6%.
The prime underlying factor behind slowdown in inflationary pressures has been significant appreciation in the exchange rate of the Russian currency​: in May average nominal RUB/$rate strengthened by 3.7% m/m.
Traditionally, in April-May period Russia’s imports of fresh foods reach a peak due to depletion of local stocks from last year’s harvest. Dependence on imports drops from June onwards when produce from the new harvest starts to come in. Last year a good harvest pushed monthly CPI rate to zero levels in June-July and on to negative values in August-September. However, this year’s harvest outlook is far less upbeat as many of Russia’s southern regions have experienced very dry weather. Additionally, analysts do not think there is a significant upside potential left in the ruble rate. BSC GM expects annualized inflation to start growing again from June onwards and forecast CPI rate of 4.2% y/y by YE20.
Russia’s producer price index of inflation (PPI) fell even further than the CPI, down by 14.1% in May ​year-on-year. The stop-shock caused by the coronacrisis has had a profound impact on industrial prices as companies simply ground to a halt.
41​ RUSSIA Country Report​ July 2020 ​ ​www.intellinews.com