Russia Inflation October 2021

Russia: Inflation comes in at highest level since February 2016 in October

Consumer prices rose 1.11% in October over the previous month, picking up from the 0.60% increase seen in September. October’s uptick marked the highest reading since March 2015 and was chiefly driven by rising prices for goods and food. Meanwhile, services prices were broadly stable at the outset of Q4.

Inflation increased to 8.1% in October, following September’s 7.4%. October’s reading represented the highest inflation rate since February 2016. Meanwhile, the trend pointed up, with annual average inflation coming in at 6.1% in October (September: 5.7%). Lastly, core inflation rose to 8.0% in October, from September’s 7.6%.

Commenting on the result and the outlook, Artem Zaigrin, Chief Economist at Sova Capital, said:

“Although the figures were in line with our estimates, the print appeared to again beat market expectations […] Going forward, we expect inflation to peak in November and slow down marginally to 7.9% yoy by YE21, with the average 2022 rate at 6.2% yoy. We believe that price pressures lasting longer than expected could require additional measures from CBR, leading CBR to hike the key rate 50bps in December to 8.00%. In contrast to our previous expectations, it might be necessary to keep the policy rate at an elevated level for longer.”

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