Aggregate output in 9M20 contracts moderately, inflation accelerates in November but the peak is near

RUSSIA ECONOMICS - In Brief 02 Dec 2020 by Alexander Kudrin

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Rosstat reported that weekly inflation during the period ending on November 30 slowed and was at 0.1% (in previous weeks of November it remained at 0.2% w-o-w). It means that monthly inflation was around 0.7% that could have brought annual inflation to 4.4-4.5%. Note that weekly inflation numbers are published with one decimal point, while monthly inflation, calculated on a broader consumption basket, is now being published with two decimal points. Hence the range in the y-o-y figure. Inflation remained in line with GKEM Analytica’s updated 2020-2021 outlook.Meanwhile, Rosstat also released its estimate of the output of the five basic sectors, such as trade (wholesale and retail), industry, transport, construction, and agriculture, which with some reservations could serve as a monthly proxy of GDP. In October this output was down by 5.1% y-o-y, which is seemingly a rather unimpressive result. It should be taken into account, however, that the weight of agriculture in the five sectors output is greater than in the GDP, while agriculture contracted in October by 6.6%, having grown fast in previous months, as this year Russia had earlier harvesting season. Note also, that Russia had fewer working days in October 2020 than in October 2019.That being said, in 9M20 the five basic sector output contracted by a mere 3.2% y-o-y (as September statistics was revised up) and the growth number will be close to that in 2020 as a whole. Russia’s GDP contraction will be also moderate.Evgeny GavrilenkovAlexander Kudrin