Russia: Inflation picks up to highest level in nearly a year
October 4, 2012
In September, consumer prices rose 0.6% over the previous month. The result came in above the 0.1% increase recorded in August and was in line with market expectations. Prices increased in all categories, in particular in services amid a further increase in utility tariffs. As a result of the monthly rise, annual headline inflation rose from 5.9% in August to 6.6% in September, the highest reading in almost a year and above the 5.0% - 6.0% target range set by the Central Bank for this year. The core consumer price index, which excludes short-term price changes influenced by administrative and seasonal factors, rose 0.7% in September, above the 0.6% rise recorded in August. As a result, annual core inflation stepped up from August's 5.5% to 5.7% in September, the highest reading in eight months. Inflation has been driven in recent months by a continued increase in food prices, amid a pick-up in prices for grain and wheat in the wake of the drought affecting the country in August. According to a September forecast from the Agriculture Ministry, Russia will harvest between 72 million and 73 million tons of grain, down from a June forecast of about 85 million tons as well as the 94.2 million tons harvested last year. Against this backdrop, government officials suggested the possibility of selling grain from state stockpiles beginning this month, in order to curb the surge in grain prices.
Author: Armando Ciccarelli, Head of Data Solutions