Weakening demand suppresses inflation

According to Rosstat, annual inflation in October slowed to 12.63% from 13.68% in September. The rise in prices last month accelerated only in the service sector. As of November 7, according to the estimates of the Ministry of Economy, made on the basis of weekly statistical data, the annual inflation rate was 12.52%. The monthly price growth rate in October amounted to 0.18%, while core inflation (excluding the influence of administrative and random factors) fell to 0.03% from 0.3% in September.

According to analysts of the MMI telegram channel, the average annual seasonally adjusted monthly inflation rate in October fell to 2.5% from 4.1% in September, non-food products in this dimension even fell in price by 0.7% after rising by 1.4% in September. “Suppressed inflation persists for six consecutive months. From May to October, the consumer price index fell by 0.9%, analysts say. It would be time to sound the alarm and talk about the need for further easing of monetary policy. But the dynamics in services are very confusing. Here, for the second month, very high rates of price growth are observed: according to our estimates, 9.5% mom, seasonally adjusted (9.9% in September). This makes us look more carefully at the emerging inflationary picture and the balance of risks.”

Recall that in October inflation expectations of citizens rose to 12.8% from 12.5% ​​in September. “The dynamics of expectations requires increased attention from the Central Bank, but is hardly sufficient in itself to tighten policy, especially against the backdrop of lower estimates of observed inflation. Inflationary expectations in the Russian Federation are not only about prices, but also about the general uncertainty and crisis identified with inflation,” notes Dmitry Polevoy from Loko-invest.

At the end of October, the Central Bank noted that partial mobilization would be a deterrent for the dynamics of consumer demand and inflation in the coming months. The regulator left the key rate at 7.5%, narrowing the inflation forecast for 2022 from 11-13% to 12-13%. “Further trajectory of the key rate and the direction of monetary policy will depend on the incoming data on the economy, on inflation, inflation expectations. Depending on what factors will outweigh, there may be a preservation of the rate, a movement up and a movement down, ”said Elvira Nabiullina, head of the Central Bank, following the meeting on the rate.

Artem Chugunov