Page 32 - RusRPTFeb22

4.2.1 CPI dynamics
Russia's annual consumer price inflation in December 2021 stood at 8.4% year on year, with the month-on-month reading at 0.8% in December, according to the latest data from Rosstat statistics agency.
As followed by bne IntelliNews, the Central Bank of Russia (CBR) doubled the key interest rate in 2021 from 4.25% to 8.5%, as it tries to catch up with inflation that persistently trends far ahead the regulator's target.
VTB Capital (VTBC) analysts suggest on January 14 that the CPI momentum in Russia is past its peak but still believe that inflation will overshoot the CBR target in 2022.
"At least for the next 2-3 months, we forecast the CPI momentum to remain stuck at (6.0-7.5)% SAAR, which would bring the 2022 above the target, to +(5.3-5.6)% y/y," the estimates of VTBC suggest.
The analysts also remind that at the last meeting the CBR envisioned that both the December and early-January inflation prints would be above the regulator's projections, which increases the likelihood of another +50bp key rate hike in February to 9%. However, VTBC expects this to be the end of the ongoing tightening cycle.
32 RUSSIA Country Report February 2022 www.intellinews.com