Page 37 - bne IntelliNews monthly country report Russia February 2024

However, S&P Global’s report that there are signs that inflation may have peaked in manufacturing, following the CBR’s steep rate hikes in December bring the prime rate to 16%, but is still rising in services.
“The pace of charge inflation remained well below September's recent high. The rate of increase was little changed from that seen in November and was the second weakest in six months. Panellists noted that competition moderated hikes in selling prices,” S&P Global said.
The pace of increase in selling prices of goods was similar to that seen in November and remained historically elevated as hikes in supplier prices were passed through to customers.
Against that input prices at Russian service providers increased at a substantial pace in December, according to S&P Global. “Higher cost burdens were attributed to greater supplier and utility prices, alongside an uptick in wage bills. Despite the pace of cost inflation slowing from November, it was stronger than the series trend,” S&P Global said.
For services, input costs continued to rise at a historically elevated pace despite the rate of inflation slowing. Similarly, output charges increased at a marked pace, but one that was the slowest since May.
Output at Russian manufacturers increased at the fastest rate since May thanks to strong customer demand and a sustained uptick in new order inflows. Concurrently, new sales rose at a steep pace in December. Purchasing activity increased at a substantial pace that was the second sharpest since August 2006.
Greater client demand was largely focused on the domestic market, however, as new export orders for goods fell for the second month running. Fewer customer requests from clients in key export markets led to the fastest fall in new business from abroad since July.
But demand for services was more buoyant. Supporting the rise in business activity was an eleventh successive monthly expansion in new orders during December. Anecdotal evidence stated that increased new business was due to the introduction of new service lines, new client acquisitions and improved demand conditions, according to S&P Global. The rate of growth was steep in the context of historic data and the fastest in four months. Unlike goods, service growth is being driven by rising exports and greater demand in key export markets, according to panellists.
The buoyant Russian economy is creating new jobs in both services and manufacturing that is contributing to keeping the unemployment rate at an all-time low of 2.9%.
37 RUSSIA Country Report February 2024 www.intellinews.com