Page 32 - RusRPTJune18

construction works has returned to the positive area, adding 1.4% y/y (-9.7% y/y in March).
4.2 Inflation
The Finance Ministry also lowered its projected inflation levels, to 2.8% for 2018 from the previously expected 4% The Russian Central Bank earlier said that inflation is expected within the interval of 3-4% this year and at about 4% next year.
Inflation has been creeping up this year but remains on the level of 2.2%-2.3% -- a post Soviet record low. The recent tumble of the ruble against the dollar caused by the imposition of new US sanctions on April 6 are expected to stoke more inflation.
Consumer price inflation in April in Russia increased slightly to 0.4% month-on-month versus 0.3% m/m in March 2018 and April 2017, according to the report by Rosstat statistics agency.
Inflation is on the slow upward trend towards the Central Bank's of Russia target of 4% , but because of rounding year-on-year inflation remained unchanged at 2.4% in April, Sberbank CIB argued on May 7.
"On the category level, food price inflation has retracted somewhat, while more stable components such as services and non-food goods have gained," VTB Capital commented on April's inflation data breakdown.
By the end of 2018, VTB expects to see inflation closer to 4.5% y/y, above the regulator's target, driven by the normalisation of food inflation, wage growth, a recovery in demand and the foreign currency pass-through effects from weaker ruble.
In the end of April in the press-release accompanying the key interest rate decision the CBR noted that recent ruble weakness could push inflation closer to the 4% target faster than expected, but expressed confidence that inflation will still remain within the target.
32 RUSSIA Country Report June 2018 www.intellinews.com