​Inflation remains elevated despite growing domestic manufacturing as the domestic demand expands faster amid election-related stimulus

RUSSIA ECONOMICS - In Brief 23 Sep 2021 by Alexander Kudrin

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The Russian industrial output continued to grow in August relatively fast y-o-y as in 8M21, and in August alone, it was up by 4.5% and 4.7% accordingly. As it happened every month in the past, Rosstat revised up previously published data for July and at the same time reported that seasonally adjusted industrial output contracted in August by 0.8% m-o-m. According to Rosstat, seasonally adjusted industrial output contracted m-o-m for the third month in a row (it happened much more moderately in June and July). Next month the recently published August statistics will likely be revised up again. The seasonally adjusted numbers will change also.In recent months growth y-o-y in the mining sector moderated faster due to the base effect. Even though it was up by 2.1% y-o-y in 8M21, and in August alone, it increased by 6.4% y-o-y, growth was faster in previous months - 12.0% y-o-y in July, and 13.7% in June. As base effects still exist and statistical numbers change every month, the 2021 outlook cannot be very accurate. Still, mining may grow by around 4% or slightly less in 2020. In 8M21, oil extraction was down by 0.8%, while gas extraction increased by 14.2% over the same period. Manufacturing performed better almost all across the board (including production of various consumer durables) as it was up y-o-y by 5.3% in 8M21 and 3.1% in August alone. In 2021 it will increase by around 4.4%. In 2022 industrial growth will decelerate to 3% or slightly lower.Meanwhile, Rosstat also reported that inflation during the seven days ending September 20 was 0.10% w-o-w, and in the first three weeks of the month, it reached 0.20%. Therefore, in September, inflation is likely to attain 0...