Inflation w-o-w slows

RUSSIA ECONOMICS - In Brief 20 Apr 2022 by Alexander Kudrin

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Rosstat reported that inflation w-o-w in seven days ending April 15, decelerated to 0.20% from 0.66% during the previous week. Food prices generally continued to rise albeit more slowly, however weekly deflation was recorded for many products in the non-food segment, such as some types of consumer electronics, locally produced cars, and medicines. As the western countries dramatically cut exports to Russia, demand for FX fell considerably, and the ruble appreciated in recent days to around the R/$80 level. Though, the ruble remained volatile and sometimes appreciated even more. A stronger ruble helped to contain inflation for some products of the consumption basket.Overall inflation w-o-w fell much faster than was expected and the ruble appreciated also much more significantly. The latter fact hints that so far, the supply of FX on the local market is steady, and exporters continue to earn FX even as volumes of exports could have declined. Note, that the CBR stopped publishing monthly statistics on foreign trade, as well as some other data.It cannot be ruled out that next week inflation may decelerate further, and in April inflation won’t exceed 1.5%, i.e., and be well below the level anticipated a month ago. So far, inflation reached 1.00% MTD and 11.05% YTD. That being said, there will be enough room for the CBR to cut the key rate later this month.Evgeny GavrilenkovAlexander Kudrin