Page 45 - RusRPTJan23

4.2 Inflation
The decline in the y/y headline inflation rate in November to 12% was largely due to broad-based falls in food and non-food goods inflation. Food inflation dropped from 12.1% y/y to 11.1% as prices rose by just 0.4% m/m, far below past price increases in November.
Non-food goods inflation dropped from 14.1% y/y to 13.4%, with the m/m increase coming in at just 0.1%. There were further falls in the prices of electrical goods (0.3% m/m) and TVs (2.3% m/m). This may reflect some discounting by retailers and comes alongside a stagnation in retail sales since April, providing further signs that demand conditions in Russia remain very weak.
Services remained the outlier last month, as prices rose by a solid 0.8% m/m and the y/y inflation rate edged down only slightly from 11.3% to 11.2%. Large increases in passenger travel and tourism prices appear to have been responsible.
The soft inflation dynamics will be welcomed by the central bank, but will not be enough to offset its concerns about inflation risks stemming from the mobilisation of reservists. In its “talking trends” bulletin this week the central bank said that “the disinflationary effect on the consumer market was short-lived” and that the loss of labour supply will result in an “intensification of pro-inflation forces” further ahead.
45 RUSSIA Country Report January 2023 www.intellinews.com