Economic performance looks good in November, albeit high inflation in December disappoints

RUSSIA ECONOMICS - In Brief 29 Dec 2021 by Alexander Kudrin

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Rosstat reported that the output of the five basic sectors (industry, agriculture, trade, transport, construction) increased y-o-y in November and 11M21 by 7.1% and 6.4%. This y-o-y growth in November looked strong due to stronger than expected production growth in agriculture (due to late harvesting season) which positively affected freight transportation. Agriculture which was down in August and September y-o-y, bounced back in October (by 5.5% y-o-y) and November (by 12.9%) so that the 11M21 tally decreased only slightly (by 1.1% y-o-y). The construction which was flat y-o-y in September and October, was up by 6.9% in November which brought the 11M21 tally to 5.5% y-o-y. Transport was up by 5.8% and 5.7% y-o-y in November and 11M21. In the previous economics brief, it was already mentioned that the industry performed very well also, therefore contributing to a strong performance of the five basic sectors last month.As opposed to these sectors retail trade growth decelerated in October and November sharply amid high inflation. It was up by 5.8% in September, 4.3% in October, and 3.1% in November (all numbers are y-o-y). The low 2020 base effect in retail is largely over and it can decelerate further in December and January 2022 as the y-o-y inflation is likely to stay elevated for at least another month before it can start coming down. Consumer paid services increased y-o-y by 14.9% in November and by 18.1% in 11M21, thus also showing a deceleration amid evaporating base effect and continuously high inflation.Inflation reportedly reached 0.82% m-o-m in December meaning 8.39% in 2021 as a whole – these are flash estimates by Rosstat to be confirmed on January 12. Mean...