CPI inflation in August was affected by seasonal factors so its dynamics was a temporary phenomenon, the CBR was quoted as saying by local media yesterday evening. As reported, CPI inflation fell to a record-low level of 3.3% y/y in August amid sharply falling fruit and vegetable prices, beating expectations. The CBR expected deflation in August but the actual outcome (-0.5% m/m) was bigger than expected as fruit and vegetable prices fell by 15.5% m/m, the CBR said. This is a temporary phenomenon and is explained with a late harvesting campaign this year, a fairly good harvest of most crops, and the desire of producers to quickly put their production for sale, the CBR added.
Market conditions in September and October will largely depend on weather conditions. Going forward, the CBR believes that CPI inflation is likely to re-accelerate, because it expects inflation to be near the 4% target by the end of the year. This is in line with the latest macro forecast by the CBR. Earlier this month, the EconMin revised its macro forecast and said that inflation will reach 3.7% at the end of the year, rather than 3.8% as previously expected. EconMin Maksim Oreshkin also does not rule out inflation below 3.5% y/y.