Russia CPI inflation October 2016

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diver diving

Russia’s inflation once again fell more than expected.

Headline inflation came in at 6.1% year-over-year for October —
the slowest rate since January 2014.

The reading was below the prior month’s reading of 6.4%, and
below the Bloomberg consensus forecast of 6.3%.

Still, the larger than expected drop probably isn’t going to spur
the Central Bank of Russia to change up its strategy.

“This is unlikely to cause the central bank to change its mind,
and interest rates will almost definitely be kept on hold at the
MPC meeting in December,” wrote Liza Ermolenko, emerging markets
economist at Capital Economics.

“But today’s data do reinforce our view that the easing cycle,
when it eventually comes, will be substantial.”

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Last week, the bank once again held rates at 10.00%, which
did not come as a surprise given that it previously said it
was done easing until 2017.

But interestingly, the policy makers also adopted a somewhat
pessimistic tone in their accompanying statement, writing
that temporary factors (including the “good harvest”) were behind
the falling inflation rate.

“Looking ahead, this year’s good harvest should help to bring
food inflation down further,” added Ermolenko. “What’s more, the
unwinding effects of earlier falls in the ruble, coupled with the
disinflationary impact of the large amounts of spare capacity in
the economy, mean that non-food price pressures should continue
to ease too.”

Russian ruble is down by 0.3% at 63.7281 per dollar as of
10:48 a.m. ET.