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revision within just a few months casts doubt on Rosstat’s ability to produce high-quality economic statistics.
4.2 Inflation
The small fall in Russian inflation to 5.2% y/y in April will provide reassurance to the central bank that inflation has now passed its peak. Analysts expect the headline rate to ease further in the coming months and we think that policymakers will cut interest rates at their meeting in June.
April’s outturn was in line with the Bloomberg consensus forecast. It was down from 5.3% y/y in March. The breakdown of the data showed that the fall in headline inflation was driven by modest declines in both food and non-food goods inflation. Services inflation was unchanged at 5.1% y/y where it has been for three consecutive months.
Rosstat’s measure of core inflation, which strips out energy prices, administered prices and some food prices, held steady at 4.6% y/y. Our own measure of core inflation, which excludes all food prices (as well as administered and energy prices) ticked up from 3.8% y/y in March to 3.9% y/y in April. Overall, core inflation doesn’t look like a cause for concern say analysts.
The big picture is that the inflationary impact of January’s VAT hike has been much more modest than many had expected. At the end of last year, the central bank was warning that inflation could rise to as much as 6% y/y –, which clearly hasn’t materialised. Inflation has now passed its peak and should edge down in the coming months before falling back below the central bank’s 4% inflation target next year.
30 RUSSIA Country Report June 2019 www.intellinews.com