Page 29 - RusRPTMay19

4.2.1 CPI dynamics
Russian CPI accelerated from 5.2% year on year (y/y) in February to 5.3% y/y in March, at the lower bound of the narrow 5.3-5.4% consensus range and slightly better than our initial expectations. The key reason for the very modest acceleration in CPI despite the recent VAT hike from 18% to 20% is that the food and services CPI stopped accelerating, staying at 5.9% y/y and 5.1% y/y, respectively. The only segment that continued showing faster price growth was non-food, up from 4.6% to 4.7% y/y, despite some slowdown in gasoline prices from 9.6% to 9.4% y/y.
Russians’ inflationary expectations for the next 12 months rose by 0.3 percentage points to 9.4% in April, the central bank said in a research note on Monday. The figure is close to the level of July–December 2018, the regulator said, adding that a new rise in inflationary expectation after a fall seen in February and March points to a persisting negative influence of temporary factors. “However, the share of respondents estimating price growth of a previous month as ‘very strong’ has been falling since February,” the note said. “This share was lower in April than in January by 9 percentage points. Nevertheless, its level of 36% is persistently high.”
4.2.2 PPI dynamics
The Russian producer price index rose 0.9% on the month and 10.9% on the year in March after a 0.1% month-on-month increase in February, the Federal State Statistics Service said in a statement on April 16. In March, prices in the mining sector grew 8.2%, in the processing industry fell 0.4%. In January–March, the prices fell 1.1% since the year start. In 2018, prices of industrial producers rose 11.7%, the service said earlier.
29 RUSSIA Country Report May 2019 www.intellinews.com