Russian Inflation Expected To Continue To Fall

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In a report published Friday, Barclays analyst Daniel Hewitt explained that the inflation in Russia has continued to decline. The PMI for June for Central Europe rose to an average of 55, while that for Russia rose to below 50. "With inflation dropping rapidly, we expect it to decline to 15.4 percent year on year from a high of 16.9 percent in March. This will mean that Q2 inflation has been a little over 1 percent, implying an annualized rate of just 4 percent, in line with the CBR medium-term target," Hewitt stated. The analyst expects the rate of inflation to increase marginally, driven by planned adjustments in the July utility prices, along with RUB depreciation that has been ongoing since mid-May. ‘Nevertheless, we think the high interest rates and low liquidity growth that has brought inflation under control will persist," Hewitt added. In addition, there is downward pressure on prices due to the low growth rate. The analyst expects Russia's Q2 current account data to decline to nearly $11 billion, driven by seasonal factors.
Posted In: Analyst ColorAnalyst RatingsBarclays
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