Russia’s inflation at 2.4% in January

Russia’s inflation at 2.4% in January
CPI inflation in January was 2.4%, well below the CBR's 4% target rate and has been falling faster than anyone expected
By bne IntelliNews February 10, 2020

Russia’s consumer price inflation in January 2020 stood at 2.4% year-on-year, Sberbank CIB estimated on February 7 based on official estimate of 0.4% month-on-month inflation for the reporting month.

Inflation continued to moderate in January, down from 3% y/y seen in December 2019. As reported by bne IntelliNewsinflation trends at a record-low and below the Central Bank of Russia (CBR) target rate of 4%. Last week the regulator cut the key interest rate for the sixth time in a row by a minimum step of 25bp from 6.25% to 6% at the policy board meeting on February 7.

In January food prices gained 0.7% m/m (2.0% y/y) in January, attributed mostly to seasonal acceleration in fruits and vegetables (prices were up 5.7% m/m). Prices on non-food items and services were up 0.2% m/m (2.5% and 2.8% y/y, respectively).

“Core inflation (i.e. inflation with seasonally affected items stripped out) was 0.2% m/m in January, which would give an annualized figure of 2.0-2.5% depending on rounding,” Sberbank CIB estimates.

The bank believes that planned additional social spending announced last month by President Vladimir Putin should boost inflation in 2H20. “As a result, we see headline inflation finishing this year at 3.0% y-o-y, versus the CBR's forecast range of 3.5-4.0%,” Sberbank forecasts.