Russia: Inflation increases in July
Consumer prices rose 0.40% in July over the last month, accelerating from the 0.22% rise recorded in June. The upturn was chiefly driven by higher prices for services, which more than offset a dip in food prices.
Inflation increased to 3.4% in July, up from June’s 3.2%. July’s result marked the highest inflation rate since November 2019. Meanwhile, the trend pointed down slightly, with annual average inflation coming in at 3.2% in July (June: 3.3%). Core inflation ticked up to 3.0% from June’s 2.9%.
Commenting on the inflationary outlook, Dmitry Dolgin, chief Russia economist at ING, noted:
“For now, we continue to see CPI acceleration in 2H20 as largely technical and limited at 3.7% by this year-end. However, the risks to that forecast are now tilted upwards, given the lack of clear evidence of demand-driven disinflation in July, combined with pronounced cost-side inflationary factors, including resumed gasoline price growth, the recent spike in global grain prices and RUB depreciation.
We take the July CPI numbers as confirmation of our initial take, that notwithstanding Bank of Russia’s generally dovish stance, a cut at the next monetary policy meeting is not as obvious a scenario as was the previous one.”