Inflation slowdown continues in January
Annual inflation slowed down in the first month of the year by 0.6 pp, to 2.4%. The decline is largely associated with the exclusion of last year’s VAT rate increase from calculation. Also, a considerable effect is exerted by the expansion of the supply of food products, the appreciation of the ruble in 2019 and subdued demand, notes the new issue of the Consumer Price Dynamics, informational and analytical commentary.
In January, food prices remained mainly unchanged (seasonally adjusted). Prices for fruit and vegetables (seasonally adjusted) have fallen for four months in a row. The reduction was registered in nearly all such products, including cabbage, potato, carrot, beetroot, onion, cucumbers, fruit and citrus. The overall favourable situation in the markets for food products and agricultural raw materials in the months to come will be the main factor constraining food inflation.
That said, prices for non-food goods rose more over the month than in the previous five months (seasonally adjusted). The acceleration is associated with a slower decline or stabilisation of prices for communication facilities, household appliances, TV and radio goods, and PCs, as well as with faster growth of prices for cars and petrochemicals, including due to the increase in excise taxes and disposal fees from 1 January 2020.
The increase in service prices also accelerated in January, largely due to the rise in capital repair charges.