Page 25 - RusRPTFeb20

4.0​ Real Economy 4.1​ ​Industrial production
Russia’s industrial output grew 2.1% on the year and 8.9% on the month in December ​after rising 0.3% on the year in November, the Federal State Statistics Service said in a report on Thursday. In 2019, industrial output rose 2.4% on the year after rising 2.9% on 2018.
4.2​ Inflation
Russia’s inflation finished 2019 at 3%,​ down from the 4.3% registered in 2018. Without the VAT increase at the beginning of last year, consumer price growth would have been even lower.
Despite some possible pickup in domestic demand in 4Q19 and higher budget expenditures, there was no increase in inflationary pressure in the final months of 2019. Year-over-year inflation should further decelerate in 1Q20 due to the high base of last year, but then the trend should reverse. The additional budget expenditures announced by President Putin could add up to 0.2 pp to inflation this year, but we still expect it to remain close to 3% by year-end.
No upward pressure on prices in December. Monthly headline inflation accelerated to 0.36% in December, from 0.28% in November. However, because prices were up 0.8% in December 2018, y/y inflation slowed to 3%, from 3.5% the month before.
The acceleration in the monthly rate was mostly attributable to a seasonal
25​ RUSSIA Country Report​ February 2020 ​ ​www.intellinews.com