Industrial PPI increased by 2.1% y/y in November, thus slowing down further from 2.3% y/y in October, the stats office reported on Thursday. This development reflected the decelerating pace of increase of domestic producers’ prices to 1.7% y/y in the month, which could not be compensated by the acceleration of the export producers’ prices to 2.5% y/y.
Domestic industrial prices continued to be driven by growing prices in manufacturing, as well as of mining and water supply, while utilities prices continued decreasing. In manufacturing, the prices increased in production of coke and refined petroleum products (up by 11.9% y/y, speeding up from 7.1% y/y growth in October), of basic metals (up by 8.1% y/y, keeping broadly same pace of increase as the previous month), of wood and wooden products (up by 5.6% y/y, speeding up from 5.1% y/y increase the previous month), machinery and equipment (up by 5.5% y/y), while prices of basic pharmaceutical products and of transport equipment decreased in November – by 1.7% y/y and 0.6% y/y, respectively.
For the seventh straight month in a year and a half the agricultural producers’ prices increased – by 14.9% y/y in November, speeding up by 8.3% y/y in October. Their annual increase was driven by both higher prices of crops and animals as the former increased by 13.1% y/y in the month, while the increase of the latter speeded up to 16.9% y/y in November from 8.9% y/y in October. We may expect agricultural producers’ prices to remain elevated because of the lower harvest this year and its poorer quality following the spring frosts and summer droughts.
Producers’ prices in the construction sector rose by 4.7% y/y in November, accelerating from 3.8% y/y in October.
We believe that the seen upward cost pressures would be supportive to consumer prices growth this year, in line with the NBS projections for them to increase by 1.3% after falling by 0.5% in 2016. Consumer prices resumed expansion in December already and their annual growth speed up to 1.9% y/y in October on accelerating food prices increase.