© Reuters. FILE PHOTO: A local resident shops at a grocery store during Ukraine-Russia conflict in the town of Svitlodarsk in the Donetsk region, Ukraine May 25, 2022. REUTERS/Alexander Ermochenko
MOSCOW (Reuters) – Annual inflation in Russia slowed further in November, but consumer prices rose again in month-on-month terms, data showed on Friday, just one week before the central bank meets for the final time this year to decide on interest rates.
Inflation has slowed since accelerating sharply after Russia began what it calls a “special military operation” in Ukraine on Feb. 24, triggering sweeping Western sanctions and disrupting logistics chains.
In November, annual inflation slowed to 11.98% from 12.63% a month earlier, in line with expectations of analysts polled by Reuters, data from the statistics service Rosstat showed.
The Bank of Russia targets annual inflation at 4%.
Month-on-month, the consumer price index (CPI) rose 0.37% after a 0.18% increase in October. In March, the index jumped 7.61%, the biggest month-on-month increase since January 1999.
The central bank is widely expected to hold its key rate at 7.5% on Dec. 16.
“At the moment there is no urgent need to change rates, as current inflation rates remain low,” said Igor Rapokhin, senior debt market strategist at SberCIB Investment Research.
“In our view, market participants are ready for cautious rhetoric from the central bank,” Rapokhin added.
Alfa Capital analyst Alexander Dzhioev agreed that the central bank would likely hold rates, but said it may consider a 25-50 basis point cut given the easing of some inflationary pressure and the need to support consumer demand.
High inflation has been one of the main concerns among households for years as it dents living standards, something that this year will be aggravated by economic recession.
Rosstat gave the following details:
RUSSIAN CPI Nov 22 Oct 22 Nov 21
Mth/mth pct change +0.37 +0.18 +0.96
– food +0.40 +0.16 +1.27
– non-food +0.06 +0.04 +0.72
– services +0.76 +0.24 +0.81
Y/Y pct change +11.98 +12.63 +8.40
Core CPI y/y pct change +15.06 +16.16 +8.71