Page 44 - RusRPTNov23

4.2 Inflation
The larger-than-expected rise in Russian inflation to 6.0% y/y in September will concern policymakers at the central bank and suggests that price pressures are now well and truly building in the economy. We think the tightening cycle will continue for a while longer, including with another 100bp interest rate hike later this month.
The outturn was up from 5.2% y/y in August and higher than the analysst consensus forecast of 5.8% y/y. In month-on-month terms prices surged by 0.9% – this was the largest monthly rise since April last year (at the height of the sanctions shock) and the largest increase in the month of September in more than two decades.
Services inflation edged up from 9.5% y/y to 9.6% and non-food goods inflation rose from 3.6% y/y to 4.6%. This largely reflects the impact of very strong domestic demand and the sharp fall in the ruble in recent months feeding through into prices. Food inflation also came in pretty strong too, rising from 3.6% y/y to 4.9%.
Russia’s central bank has been concerned about inflation developments for months now and has delivered 550bp of interest rate hikes since July, taking the policy rate to 13.00%. The tightening cycle has been heavily front-loaded
44 RUSSIA Country Report November 2023 www.intellinews.com