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July 13, 2018 www.intellinews.com I Page 10
Russian inflation edges down to new record low, but signs that price pressures are building
bne IntelliNews
Despite the Central Bank of Russia (CBR) warn- ing of rising inflation in the rest of the year following the government’s decision to increase VAT, inflation fell modestly in June to set a new post-Soviet record low of 2.3% y/y, Rosstat re- ported on June 9.
In summer many Russians move to the dacha and work in the garden. The modest decline in Russian inflation in June, to 2.3% y/y, was mainly a result of a sharp fall in fruit and vegetable price inflation. And while headline inflation is still weak, there were some tentative signs in the data that broader price pressures may be starting to build.
“Last month’s figure was lower than May’s outturn of 2.4% y/y but slightly higher than the
Bloomberg consensus forecast of 2.2% y/y,” Capital Economics said in a note. “The big picture is that inflation has now hovered at rates of 2.2-2.5% y/y for eight months, well below the central bank’s 4% inflation target.”
The breakdown of the data showed that the decline in the headline rate between May and June was a result of lower food inflation – something that happens every year. Food prices fell by 0.2% y/y last month, having risen by 0.4% y/y in May.
There are early signs that broader price pres- sures are beginning to build. Services inflation ticked up, while May’s Markit Services
PMI underperformed, which shows that
the recovery is still fragile.