Russia: July CPI inflation expected to rise to 2.6%Y/Y – TDS

Analysts at TD Securities point out that either today or tomorrow, Russia’s July CPI inflation is to be released and is expected to rise to 2.6%Y/Y from a prior 2.3%, and keep trending back towards the target of 4%.

Key Quotes

“Due to the planned VAT hikes in 2019 (up to 20% from 18%), the CBR expects inflation to temporarily exceed 4% during the course of 2019. This is a one-off target overshoot that the CBR anticipates for next year.”

“Going forward, we expect further easing to be constrained by a possibly adverse dynamic of inflation expectations. However, we still see scope for further 50bps of easing in the forecast horizon.”