MOSCOW: Russia’s inflation dropped to a post-communist low. Inflation fell to 3.3% year-over-year in August, according to the country’s state statistics service. That’s the lowest reading in the post-USSR era, according to data from Trading Economics.
Economists surveyed by Bloomberg expected a reading of 3.7%, following up on July’s 3.9%. “[W]e expect the headline rate to remain below the central bank’s 4% target over our forecast horizon,” according to William Jackson, senior emerging markets economist at Capital Economics, in a note to clients. Looking under the hood of the data, food inflation fell to 2.6% year-over-year from the prior month’s 3.8%. Non-food goods inflation dropped as well. “Against this backdrop, we remain confident with our forecast that the central bank will cut the policy interest rate to 8.0% by the end of this year and to 6.0% by end-2018, from 9.0% now,” Jackson added. “This is more easing than the markets are currently pricing in.” His team forecasts that the central bank will cut rates by 50 basis points at its next meeting, which will be next week on September 15.
