Annual consumer price inflation in April 2023 in Russia declined further to 2.3% year on year after 3.5% y/y seen in March, posting the lowest CPI since February 2018, according to the latest data from RosStat statistics agency. (chart)

In April in month-on-month terms inflation was 0.4%, in line with March and within market expectations, analysts at Renaissance Capital commented. The seasonally adjusted and annualised price growth remained around the CBR’s projection of 4%, the analysts estimate.

“The decisive contributor to the price growth since the end of last year is the service sector, which has been growing at an average of 1.0% per month over the last 6 months,” RenCap notes.

At the same time, so far inflationary pressures remained low in May, with the latest weekly data reflecting zero consumer price growth, implying that annual inflation remains at 2.3%, the analysts estimate.

RenCap expects “to see a slight acceleration in annual inflation in the coming months (to above 4% from August onwards) from a 2022 base”. Inflationary pressures are expected to remain subdued throughout 2023, with annual rate forecasted at 4.6% in December, in the lower range of the CBR’s latest guidance of 4.5%-6.5%.

As followed by bne IntelliNews, despite inflation rapidly converging to the long-term target of 4% in March, the head of the CBR Elvira Nabiullina did not rush to confirm the disinflationary trend, let alone signal any dovish policy shifts. She attributed the plunge in inflation to seasonal factors and the high comparison base (price growth spiked at over 16% in March 2022).