OREANDA-NEWS. July 07, 2010. CPI inflation in June was 0.4% (+5.8% YoY), according to newly posted Rosstat data, reported the press-centre of OTKRITIE Financial Corporation.

View: The decline in inflation from last month’s 6.0% figure is good news, especially given the lull in disinflation in May. At this point, inflation seems to be bottoming out and we may see some acceleration in CPI growth going forward, for a number of reasons. First, M2 is growing at 31% YoY, which will put pressure on CPI.

Second, we do not expect further ruble appreciation, as Russia’s current account has weakened on the back of a 33% YoY growth in imports. CBR has recently increased its interventions in currency markets, stifling a strengthening of the ruble. Thus, one of the drivers for disinflation, ruble appreciation, will no longer be a factor. Additionally, PPI now stands at 19.1% YoY, and we believe that accelerated growth will put pressure on consumer prices . We anticipate CPI to grow to 7-7.5% by year’s end.