Russia: Inflation hits highest level since September 2019 in October
November 6, 2020
Consumer prices increased 0.43% over the previous month in October, swinging from the 0.07% drop logged in September. October's figure marked the sharpest rise in prices since April and chiefly reflected higher prices for food products and non-food items which more than offset lower services prices.
Inflation came in at 4.0% in October, up from September’s 3.7%. October's reading represented the highest inflation rate since September 2019. Meanwhile, the trend pointed up slightly, with annual average inflation coming in at 3.2% in October (September: 3.1%). Core inflation rose to 3.6% from September’s 3.3%.
Commenting on the monetary policy outlook, Dmitry Dolgin, Chief Economist at ING, said:
“The recent higher-than-expected ruble volatility, combined with higher global grain prices and stronger-than-expected effect of the second wave of Covid suggests that the year-end CPI could be in the 4.0-4.2% range, higher than our initial 3.7% forecast. On the one hand, given the temporary nature of most of the near-term pro-inflationary factors, this should not trigger an immediate reversal in the dovish stance. On the other hand, a possible easing in the regional budget policy could be a challenge to the disinflationary view for 2021, limiting the scope for further cuts in the key rate. We are now less certain that Bank of Russia will be able to proceed with the key rate cut at its upcoming December meeting.”