Inflation jumps in the first days of December due to the rise of regulated tariffs

RUSSIA ECONOMICS - In Brief 07 Dec 2022 by Alexander Kudrin

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Rosstat reported that in seven days ending on December 5, inflation w-o-w jumped to 0.58%, an unprecedented level after months of deflation in the summer and slow inflation in October. It is not yet clear what the final inflation print in November will be (to be published on December 9). Though given that the MTD inflation on November 28 reached 0.37%, it could be slightly over 0.4% m-o-m, as Rosstat hinted how it would split the recent weekly inflation print. The agency reported the MTD inflation at 0.52% and allocated around 0.06% to November. Albeit the m-o-m November inflation figure may be slightly different as Rosstat uses different consumption baskets to calculate w-o-w and m-o-m inflation. Inflation looked high in the first days of December as electricity prices increased by 8.63% MTD on December 5, and the w-o-w price growth was the same, meaning that the indexation of tariffs took place on December 1. The same happened with LNG (supplied to households), as the price grew by 6.5% in both periods. Similarly, tariffs for hot water grew by 6.87%, while cold water tariffs were up by 7.58%. Wastewater canalization tariffs grew by 7.86%. Heating prices increased by 6.82%. All numbers are both MTD and w-o-w. Prices for airline tickets grew by 5.71% w-o-w. Inflation in the rest of the segments of the consumption basket was rather moderate and generally didn’t show clear signs of acceleration compared to the previous week. It is likely that the indexation of tariffs was a one-off action, and weekly inflation for the rest of the year will moderate. Still, it is almost certain that the m-o-m inflation will exceed 1% in December, prompting the CBR not to cut the key rate....