Inflation peaked in March

RUSSIA ECONOMICS - In Brief 06 Apr 2021 by Alexander Kudrin
Rosstat reported that inflation in March reached 0.66% m-o-m, which is a deceleration compared to m-o-m in February. Even though y-o-y inflation reached 5.79% it is only slightly higher than y-o-y inflation in February. Overall, in the second half of March inflation w-o-w started to decelerate. In April y-o-y inflation is likely not to exceed 0.7% m-o-m (and could be even close to 0.5%) which will mean the beginning of a deceleration of inflation y-o-y. In May-June, however, the y-o-y inflation is likely to flatten as a year ago m-o-m was low (0.3% and 0.2%). Y-o-y inflation will start rapidly falling in the autumn. It is not yet certain what the CBR may do. The key rate turned negative at the end of last year and can become positive not sooner than in 4Q20 if the CBR were to keep it at the current level. It looks as though the CBR decision on the key rate due at the end of April will largely depend on the w-o-w inflation in the following weeks.Evgeny GavrilenkovAlexander Kudrin

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