Page 34 - RusRPTMay20

4.2​ Inflation
The CBR still believes that the plunge in demand due to the crisis will overwhelm even the risks coming from the recent plunge in oil prices. The CBR now sees inflation in the range of 3.8-4.8% by the end of the year, despite the devaluation of the ruble effects. Russian consumer prices rose 0.2% over the week ending on April 20, flat compared to the previous week. "Based on the latest data, monthly inflation seems set to reach 0.9-1% in April (versus 0.3% month on month in April 2019), which would translate into 3.1-3.2% year-on-year growth, up from 2.5% y/y in March," Sberbank CIB estimated. The bank expects the current inflationary surge caused by a combination of ruble depreciation and increased demand for food and essentials to continue in April-May, and then stabilise and finish the year close to the CBR's target of 4%, as weak domestic demand should constrain price growth.
In March, 12-month consumer price inflation remained rather moderate at 2.5%.​ However, the month-on-month inflation accelerated to 0.6%. Especially food prices rose briskly in March (up 1 % m-o-m). It seems likely that prices for foodstuffs and household items were driven up by stocking up by households in anticipation of coronavirus times.
Both Sberbank and Romir household payments monitoring report that household consumption spending increased strongly just after mid-March, but declined significantly either in the final week of March or the first week of April. This suggests an easing in acute price pressures.
Modified core inflation jumped to 0.35% m/m, the highest since early 2019, which translates into 4.2% growth in annualized terms.
The acceleration was driven by the weaker ruble and increased demand for
34​ RUSSIA Country Report​ May 2020 ​ ​www.intellinews.com