Page 46 - RusRPTSept21

been driven up to its highest level in several years after falling to post-Soviet lows in 2019.
The Central Bank of Russia (CBR) has made a series of rate hikes to get inflation under control – March (25bp), April (50bp), June (50bp) and July (100bp) – and consumer price inflation (CPI) is currently running at 6.5%. The central bank is expected to impose another 25-50bp hike at its meeting next week, but analysts say inflation has probably been contained now, although following Russian President Vladimir Putin’s promise to make $5bn worth of pre-election one-off payments to pensioners and servicemen inflation may tick up temporarily to 6.7% in the coming months as a result.
“Inflationary pressures across the Russian manufacturing sector eased in August,” said Markit. “Although cost burdens rose markedly, the rate of increase softened to the slowest since September 2020. Where a rise in input prices was reported, firms linked this to hikes in supplier costs and material shortages. Nevertheless, the rate of output charge inflation accelerated from that seen in July. Manufacturers hiked their selling prices in an effort to pass through higher costs to clients where possible.”
Markit said that input costs for the manufacturing sector rose at the slowest pace for almost a year. In contrast, firms hiked their selling prices at a faster pace in an effort to pass on higher cost burdens to customers.
Demand in August was slowing, largely due to the evaporation of export orders. The rate of contraction was the fastest since November 2020. Alongside weaker domestic demand, total sales were dampened by a decrease in foreign customer demand. New export orders fell at a marked pace that was the quickest since May 2020, Markit reports.
“Lower new order inflows reduced pressure on capacity, as backlogs of work fell further. The decrease in work-in-hand was solid despite easing to the slowest for five months. As a result, firms cut workforce numbers for the third month running. The rate of job shedding quickened to the sharpest for nine months as firms reportedly did not replace voluntary leavers,” Markit said.
Prices have also been affected by the disruption to supply chains and rapidly rising commodity prices. Raw material shortages remained severe during August, reports Markit’s panel of business leaders, as vendor performance deteriorated markedly again. That said, lead times lengthened to the smallest extent for nine months amid a sharp decline in purchasing activity.
46 RUSSIA Country Report September 2021 www.intellinews.com