Russia’s inflation seems decelerating w-o-w but accelerates y-o-y

RUSSIA ECONOMICS - In Brief 17 Jun 2021 by Alexander Kudrin

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Rosstat reported that w-o-w inflation during the period ending on June 15 was at 0.12%, which is lower than during the previous seven-day period when it was at 0.16%. As a result, inflation in the first two weeks of June reached 0.28%. Inflation y-o-y, however, still accelerate as the m-o-m inflation in June 2020 was at 0.22%.Note that cumulative w-o-w inflation during some months may not necessarily be equal to m-o-m inflation. This difference stems from the fact that these two measures of inflation use different consumption baskets. Last month, for instance, m-o-m inflation reached 0.74% and exceeded cumulative w-o-w inflation by 0.13% - quite significant a difference, which was above expectations. Meanwhile, in the past, it also occurred that cumulative w-o-w inflation for some months was higher than the officially reported inflation w-o-w.Even though Russia’s inflation in recent months appeared higher than was expected (not in Russia alone, but some other countries as well), there are signs that it is likely to decelerate m-o-m. For instance, in June, m-o-m inflation is expected to stay around 0.54%, implying that inflation y-o-y can reach 6.3%, but from July, inflation should start decelerating y-o-y. Meanwhile, since December 2020, prices of fresh fruits and vegetables grew more than any other prices, thus significantly contributing to the overall CPI. Cabbage prices, for instance, increased by a factor of two. To some extent, it happened due to late spring and unfavorable weather conditions in May, but in 2Q21, these prices should start falling fast as well. However, by year-end, the inflation is still expected to be slightly above 5.0%.Evgeny GavrilenkovAlexand...