Page 50 - RusRPTNov21

4.2.2 PPI dynamics
Russian producer prices printed -1.0% m/m / +26.3% y/y in September, falling short of the Bloomberg consensus (+29.7% y/y) and our expectations (+28.8% y/y).
Industry weights in PPI are proportional to value added, so petroleum products and metals have the largest impact on aggregate dynamics: this time, the seasonally adjusted momentum dropped -1.0% m/m SA, from +1.0% m/m SA previously, according to our estimates, driven by the aforementioned items both within mining & quarrying and manufacturing.
It is worth noting that the September CPI decoupled from consumer-PPI consistent levels (Figure 1): this was mainly due to fruits & vegetables affecting the CPI and missing from the PPI (see also Russia CPI - September's cold sends vegetables prices up, cools core's momentum, of 8 October).
Analysts expect this gap between the CPI momentum and the run rate in consumer-oriented producer prices to narrow in the coming months: fruits & vegetables prices are likely to revert back to seasonal norms, as their September spike was probably due to shifted seasonality, which is going to reverse in the coming months.
The outlook on consumer prices remains unchanged: the CPI run rate is likely to pass the local peak in September-October (and the annual CPI is to peak at +7.9% y/y) and gradually slow thereafter, in line with the easing consumer-PPI trend.
50 RUSSIA Country Report November 2021 www.intellinews.com