Page 51 - RusRPTOct20

4.2​ Inflation 4.2.1​ CPI dynamics
Russia's consumer price inflation remained at zero in month-on-month terms and accelerated to 3.6% year on year in August 2020, ​up from 3.4% y/y seen in July, according to the latest data by RosStat statistics agency.
The inflation reading for August was in line with the expectations based on previousweeklypricegrowthreports.Asreportedby​bneIntelliNews,​ the central bank ​continued to cut the key interest rate in July​, as inflation ​trended safely below the target 4%​.
BCS Global Markets on September 7 commented that the base factor effect was the primary driver behind price growth in the reporting month, as in August 2019, Russia recorded m/m deflation of 0.2%.
Food prices declined by 0.8% m/m due to seasonal deflation in the prices of vegetables and fruits, while non-food consumer goods became more expensive, up 0.4% m/m, led by tobacco, electronics, construction materials and gasoline.
The cost of services to the population also rose by 0.4% m/m on the back of rises in tariffs for passenger transport and natural gas, BCS GM writes.
"Rising inflationary pressures coupled with an increase in geopolitical tensions and Russian currency weakness preclude a shift in the Central Bank of Russia (CBR) monetary policy," BCS GM chief economist Vladimir Tikhomirov argues, believing that the CBR will abandon any further moves towards monetary easing for the time being.
BCS GM now expects the key interest rate to remain unchanged at 4.25% through year-end and reiterates the 2020 inflation forecast at 4.1% y/y.
51 ​RUSSIA Country Report​ October 2020 ​ ​www.intellinews.com