Page 51 - RusRPTOct22

4.2.1 CPI dynamics
Deflation in Russia sharply slowed as of September 12, to 0.03% after 0.13% the previous week. Annual inflation fell to 14%.
The main contribution to slowing down the decline in prices was made by cucumbers, which rose in price by 8.4% at once, due to which the prices for all fruits and vegetables decreased by only 1.6% (despite the fact that potatoes fell seasonally by 5.17%). In addition, air travel has risen in price again - by 3.65% in a week.
Most likely, this is not yet a sign of the turning point that economists are waiting for. The economic Telegram channel MMI, which has long been ironic about the large weight of vegetables in Rosstat’s inflation data, said that it was only a “cucumber rally”. If we exclude cucumbers and more expensive vegetables and flights from the calculation then in the last three weeks deflation has remained within the range of 0.07-0.09%, which means that there is no acceleration of inflation.
Consumer prices fell by 0.5% m/m in August, the third consecutive monthly decline and largest monthly fall in five years. This pulled the year-on-year rate down from 15.1% to 14.3%. In seasonally-adjusted m/m terms, prices have risen at an annualise rate of just 2% in the past three months, below the CBR’s 4% target.
The softening in price pressures was due to food and non-food goods. Food prices fell by a chunky 1.4% m/m, pulling the y/y rate down to 15.8%. This was mostly due to larger-than-seasonal declines in fruit and vegetables prices. Non-food goods prices were flat m/m and the y/y rate eased from 16.5% to 15.5%. Prices of TVs, computers and construction materials continued to fall m/m. Meanwhile services prices were flat m/m as well and the year-on-year rate eased only a touch to 10.5%.
Inflation dynamics in Russia continue to be dominated by the ruble, which remains 20% stronger against the dollar than pre-war levels. And with consumer demand still very weak, price pressures are likely to ease further.
51 RUSSIA Country Report October 2022 www.intellinews.com