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Alfa-Bank, Natalia Orlova: January CPI up 1.0% m/m - NEUTRAL

February 08, 2016 | Cbonds

Rosstat reported 1.0% m/m CPI growth in January, which is slightly below our and the market expectations, however it still represents an acceleration from 0.8% m/m seen in December 2015. Currently, the main pressure is coming from the ~15% ruble depreciation in December-January, which according to the CBR’s recent estimates, should add 1.3 pp to 1Q16 inflation trend. This should keep monthly CPI growth at 1% m/m in the next couple of months, in line with our monthly forecast. In the meantime, the inflationary outlook for the rest of the year has worsened. First, starting April, Minfin plans to make an extra hike in the excise on gasoline and fuel oil by roughly 25%, which will not allow local prices to benefit from the decline in the global oil prices. Second, it proposes to introduce in 2H16 an excise on a number of potentially unhealthy food products with high fat and sugar content (including 20% excise on soft drinks), which will also have inflationary consequences. As a result, we reiterate that the key policy rate cut looks unlikely for 2016 and keep our 10% annual inflation forecast, expecting that the market consensus will have to adjust its inflation forecast yet.


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