According to RosStat, price growth in July was 1.14% month on month and 9.1% year on year. Seasonally adjusted, price growth, according to our estimates, accelerated to 1.33% m/m (0.74% in June). Tariff indexation made a significant contribution. (chart)

As bne IntelliNews reported, the Central Bank of Russia (CBR) has been working hard to bring down inflation and hiked rates 200bp in July to 18% in an effort to stamp on inflation. At the same time the government is using non-monetary means to cool the economy as the military Keynesianism drivers that have overheated the economy are exhausted.

In particular, a generous mortgage subsidy programme was ended on July 1 and the volume of new mortgages has fallen sharpy and housing prices are expected to follow suit soon that will also take the wind out of inflation’s sails.

Renaissance Capital reports that without indexation, the growth of prices for consumer services slowed down in July but accelerated in food and non-food products.

“It is worth noting that the growth rate of the core consumer price index (excluding housing and communal services tariffs, fruit and vegetable products and a number of other volatile components) has been slowing for the third month in a row and reached 0.35% m/m seasonally adjusted (0.58% in June),” the bank reports.

“We believe that the peak of inflation was most likely passed in July,” says Renaissance Capital. “As the 2023 data calculation base is exited, annual inflation will begin to decline and reach 7.0% by the end of the year. However, the risks to our forecast remain tilted upwards. In light of this, as well as the increased uncertainty regarding the 2025 budget plans in August, we maintain our forecast for the end of the monetary tightening cycle in September with a 50 bp rate hike to 18.5%.”