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All news / Deflation Possible in August, Russian Economy Ministry Predicts

  • 08 Aug 2019, 12:01

The Russian economy is very likely to experience monthly deflation in August, but consumer prices will be up 4.4-4.5% in year-on-year terms, the economy ministry said on Wednesday, according to Reuters.Deflation may come at 0.2-0.0% due to falling prices for vegetables and fruit, the ministry said.

Annual inflation in Russia slowed down in July 2019 to 4.58% after 4.66% in June, the Economic Development Ministry said in a report on Wednesday.

“In July 2019, annual inflation continued to slow down — to 4.58% after 4.66% a month earlier,” the report stated.

An increase in consumer prices was mainly driven by adjustment of tariffs on housing and public utilities to the actual inflation. Tariffs rose by 2.47%, the ministry informed.

According to ING analysts, the slowdown in the Russian inflation growth from 4.7% YoY in June to 4.6% YoY appears positive at a first glance, as it is below the consensus forecast of 4.7%.

“However, a closer look at the CPI composition suggests that only the services segment (c. 28% of the total CPI basket) showed deceleration in the growth – from 4.9% YoY in June to 4.5% YoY in July – thanks to a more restrained indexation of communal housing tariffs: by 2.4% in July 2019 vs. 4.0% in July 2018,” the analysts wrote.