Russia Inflation June 2020

Russia: Inflation hits highest level since November 2019

Consumer prices increased 0.20% in June over the last month, slowing down from May’s 0.27% increase. June’s result marked the softest rise in prices since October 2019.

Inflation came in at 3.2% in June, up from May’s 3.0% print. June’s figure was the highest inflation rate since November 2019. Meanwhile, the trend pointed down mildly, with annual average inflation coming in at 3.3% in June (May: 3.4%). Core inflation was steady coming in at May’s 2.9% in June.

Commenting on inflation outlook, Dmitry Dolgin, chief Russia economist at ING, said:

“Given that the current pick-up in CPI is caused largely by the base effect, and given new disinflationary factors, we now do not exclude downside to our CPI forecast that we recently lowered to 3.7% YoY for year-end 2020. This reaffirms our view that the key rate has at least 50 bp downside from the current 4.5% level, to be realized throughout 2H20, and the likelihood of a 25 bp cut in July has increased. Meanwhile, pro-inflationary risks attributable to the possible return of FX volatility in 2H20 and a pick-up in consumer demand may return to focus later in the year.”

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