31 Dec 2019 17:28

Russia had 3.0% inflation in 2019, second lowest ever (Part 2)

MOSCOW. Dec 31 (Interfax) - Russia had 0.4% inflation for the month of December, according to preliminary data, up from 0.3% in November and 0.1% in October, the Federal State Statistics Service (Rosstat) said.

Russia had 0.2% deflation in each of September and in August, and inflation of 0.2% in July, zero inflation in June, inflation of 0.3% in each of May and April and March, 0.4% in February and 1% in January.

The December inflation was level with the 0.4% that analysts had predicted in a consensus forecast for Interfax at the end of the month.

Inflation was 3.0% in the year, the second lowest in record, and down from 4.3% in 2018. Inflation was 2.5% in 2017, the lowest in recent Russian history, which was way below the previous low of 5.4% for 2016. Consumer prices rose 12.9% in 2015, 11.4% in 2014, 6.5% in 2013, 6.6% in 2012 and, in what was the lowest figure at the time, 6.1% in 2011.

The 2019 inflation figure was within the Central Bank of Russia's target range of 2.9%-3.2% but still way below its 4.0% target.

Inflation for the year was far lower than had been forecast at the start of 2019. The Central Bank initially forecast 5%-5.5% and the Russian Economic Development Ministry said 4.3%. Analysts told Interfax in a consensus forecast a year ago that they thought 4.7% inflation for the year was likely.

Rosstat said the preliminary December inflation figures were based on weekly monitoring for a narrower range of goods and services than monthly data. The final monthly data, to be released on January 10, will be based on a broader range of 510 goods and services.

Food prices went up 0.7% in December and 2.6% in 2019 as a whole, compared with 4.7% in 2018.

Nonfood prices rose 0.1% in December and 3.0% in 2019, compared with 4.1% in 2018.

Services averaged up 0.2% in December and 3.0% in 2019, compared with 3.9% in 2018.

The Econ Ministry is forecasting 3.0% inflation in 2020, but Economic Development Minister Maxim Oreshkin said on December 10 that annual inflation in Russia might fall below 2.5% in Q1 2020 and there was a risk that it will be even lower than the baseline forecast of 3% in 2020.

The CBR said following its last rate cut on December 13 that it had lowered its 2019 inflation forecast from 3.2-3.7% to 2.9-3.2% but kept its 2020 forecast at 3.5-4.0%.

The analysts told Interfax in their consensus forecast at the end of December 2019 that they thought inflation would be 3.6% in 2020. They expect the CBR to lower its key rate to 5.75% during the coming year.