OREANDA-NEWS. October 07, 2010. Rosstat reported Russian CPI in September at 0.8% MoM and 7.0% YoY, reported the press-centre of OTKRITIE Financial Corporation.    

View: September inflation figures were exactly in line with the consensus and our own expectations. However, the new inflation figures do represent a substantial hike compared with the YoY figures of 5.5% in July and 6.1% in August. A sharp acceleration in inflation began in early August alongside expectations of a severe increase in food prices. We believe the CPI will continue to rise until the middle of next year, largely because the recession-driven, low monthly rates will be removed from the index. We expect the 2010 year-end CPI to be at a 9.2% level.

As the spike in inflation is not monetary-driven, we do not believe interest rate increases would be the appropriate means of addressing inflation at this stage. However, we believe CBR may already start supporting ruble appreciation to cap price growth in imported goods in the coming weeks. Therefore, we reiterate our positive outlook for the ruble in the near-run, and reiterate a RUB28.88/USD exchange rate at year’s end.