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Russian CPI inflation picks-up as expected in November

By Alexander Bueso

Date: Thursday 06 Dec 2018

Russian CPI inflation picks-up as expected in November

(Sharecast News) - The cost of living in Russia accelerated to its quickest pace in over a year last month on the back of dearer food.
Year-on-year, the rate of increase in consumer prices picked-up from 3.5% to 3.8%, which was exactly in-line with economists' forecasts.

It was the fifth consecutive monthly increase and took CPI to its highest reading since July 2017, although it remained below the Russian central bank's target of 4.0%.

Food prices, excluding those for fruits and vegetables, grew by 3.8% in November, after a rise of 3.1% in the month before.

Non-food prices meanwhile were up by just a tenth of a percentage point to 4.2%, while service price inflation slowed from 4.0% to 3.8%.

The Russian statistical agency's so-called measure of 'core' inflation did rise from 3.1% to 3.4%, but analysts at Capital Economics pointed out how - unlike in other countries - it contained some food prices.

Versus October, CPI was ahead by 0.5%.

Despite Thursday's CPI figures, Capital Economics's William Jackson continued to expect that Central Bank of Russia would keep rates on hold when policymakers met the following week.

Jackson pointed to the resilience in the rouble despite the drop in crude oil prices, the decline in market-based expectations for inflation expectations since CBR last hiked rates in September and the fact that CPI thus far seemed to be evolving in-line with rate-setters' expectations.

"We expect the policy rate to remain unchanged at 7.50% over the next 12 months, with cuts likely in 2020 as inflation ultimately falls back."



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