Inflation in Russia in February amounted to 0.46%

Annual inflation, according to Rosstat, slowed to 10.99% in February (analysts also expected a slowdown to 11.0%) from 11.77% at the end of January and 11.94% at the end of December.

The core consumer price index, which excludes changes in prices for individual goods that are influenced by factors that are of an administrative and seasonal nature, in February 2023 amounted to 100.13%. In annual terms, the core price index in February fell to 112.69% from 113.72% in January.

Food products in February rose in price by 0.79% (in annual comparison - rose in price by 9.33%). Including fruits and vegetables became more expensive in February by 6.69% (in annual terms increased in price by 3.44%).

Non-food products in February fell in price by 0.08% (in annual comparison - rose in price by 11.22%).

Services in February rose in price by an average of 0.72% (in annual terms - rose by 13.01%).

On Wednesday, Rosstat simultaneously published data on weekly price dynamics from February 28 to March 6.

Inflation in RUSSIA from February 28 to March 6 was zero, after a deflation of 0.02% from February 21 to 27 and a price increase of 0.06% from February 14 to 20.

Since the beginning of the month, the increase in prices by March 6 was zero, since the beginning of the year it amounted to 1.30%.

As noted, the specifics of last year's dynamics of consumer prices, which began a sharp rise at the very end of February, formed a non-standard statistical situation: depending on the calculation method, the estimate of annual inflation can vary significantly.

From the data for 6 days of March this and last year, it follows that annual inflation in the Russian Federation as of March 6 slowed to 8.96%, if calculated from weekly dynamics, and slowed to 9.43%, if calculated from average daily data for March 2022 year (the Ministry of Economic Development switched to such a calculation method in February).

In March 2022, prices jumped by 7.61% over the month, so in March this year, annual inflation may slow down by about 7 percentage points. and go to the area of ​​4% and even below the target - but then, starting from May, against the backdrop of the already low base of last year, annual inflation may again begin to accelerate.

Zero inflation in the first week of March was largely due to a 2.0% decline in prices for fruits and vegetables, which was caused by a 14.2% fall in prices for cucumbers.

The Central Bank has repeatedly stated that prices for fruits and vegetables have a pronounced seasonality, and when making decisions on monetary policy, although it evaluates one-time inflationary factors, it still focuses on stable components.

The cost of a flight in the economy class cabin of an aircraft decreased from February 28 to March 6 by 0.3% (from February 21 to February 27 - decreased by 3.7%).

Commentary of the Ministry of Economic Development

The Ministry of Economic Development of the Russian Federation estimated annual inflation in the Russian Federation as of March 6 at 9.43%, the figures are given in the review of the ministry "On the current price situation." As reported, in February, the Ministry of Economic Development switched to calculating annual inflation using the average daily price increase for the reporting month of the previous year, rather than weekly data, so the difference in estimates is 0.4 percentage points (analysts polled by Interfax, noting the conventionality of annual inflation estimates, consider that calculations based on weekly dynamics more accurately reflect annual figures, especially if there were strong fluctuations during the month).

"In the week from February 28 to March 6, 2023, prices did not change (0.00%). In the reporting week, prices for food products continued to decline (by 0.13%) due to the continued reduction in prices for fruits and vegetables, for other food products, prices increased In the non-food segment, prices rose by 0.06% amid rising prices for domestic-brand cars.In the services sector, prices also resumed (by 0.10%) after deflation last week amid an increase in the cost of sanatorium and HEALTH services and a slowdown in the decline in prices for domestic flights," the Ministry of Economic Development said in a review.

"Hawkish" signal of the Central Bank

As reported, the Board of Directors of the Bank of Russia at its meeting on February 10, having made the expected decision to keep the key rate at 7.5%, gave the market a "hawkish" signal about the future direction of monetary policy.

Based on the results of the three previous meetings, the Central Bank did not give a directional signal to the market, using only its formal part in the statement. ("The Bank of Russia will make further decisions on the key rate, taking into account the actual and expected dynamics of inflation relative to the target, the process of economic restructuring, as well as assessing the risks from internal and external conditions and the reaction of financial markets to them").

This time, the Central Bank added a hawkish phrase to the formal part of the signal. "If pro-inflationary risks increase, the Bank of Russia will assess the feasibility of raising the key rate at the next meetings," the regulator said. In the glossary of the Central Bank, “next” usually means three upcoming meetings.

The HEAD of the Bank of Russia, Elvira Nabiullina, at a briefing following the results of the Board of Directors of the Central Bank on February 10, said that pro-inflation risks in the Russian economy as a whole have increased, so the likelihood of a key rate hike in 2023 exceeds the likelihood of its reduction.

"Recently, important changes have taken place. On the one hand, the terms of foreign trade have noticeably worsened - Russian oil prices have fallen . On the other hand, the situation in the economy is better than the October forecast. A shift in the structure of demand continues: consumption remains restrained, private investment is slowing down, but "budget spending is growing. At the same time, pro-inflationary risks have generally increased. Therefore, this year the probability of a rate increase exceeds the probability of its reduction. The expediency of changing the rate will be determined by the development of the situation," the head of the Central Bank said.

The Central Bank’s forecast for inflation for 2023 is 5-7%, the forecast of the Ministry of Economic Development is 5.5%.

The consensus forecast of economists polled by Interfax in early March for inflation in 2023 is 6.2%.