OREANDA-NEWS. August 13, 2010. Rosstat reported that CPI accelerated to 0.2%/week for 2-9 August, up from the 0.1%/week level that it had enjoyed for the past few months. The last time Russia has seen weekly CPI above 0.1% was in March. Inflation YTD remains at 5.0%, reported the press-centre of OTKRITIE Financial Corporation.

View: CPI accelerated despite the seasonality factor that traditionally pushes down August inflation numbers. We believe this acceleration is driven by higher demand for grain and flour as well as by sharply increased inflation expectations. Hence the numbers are not any reflection of increased costs, which could not have been translated into retail yet.

The slowdown of economic recovery due to the drought will likely not allow CPI to accelerate to pre-crisis levels, hence we reiterate our 7.5% CPI forecast. However, our 8% CPI forecast for next year now seems to be at risk.