Russia CPI slips in November as good harvest cuts food prices

Increases in the cost of living in Europe's largest country declined in November as food price inflation slowed, but not by enough to justify another interest rate cut at its central bank's next policy meeting.

The rate of increase in Russian consumer prices slowed from 6.1% year-on-year in October to 5.8% for November, as food price inflation slipped from 5.7% to 5.2% on the back of a better harvest.

Price pressures retreated across the board, with prices for non-food goods easing from growth of 7.0% to 6.7% and those for services from 5.4% to 5.3%.

Indeed, the so-called 'core' CPI measure also fell back, from 6.4% to 6.2%.

Nevertheless, William Jackson, Senior Emerging Markets Economist at Capital Economics, believed both headline CPI and the Bank of Russia's own measure of household inflation expectations should have fallen more sharply to allow for a reduction in policy rates.

In 2017, matters were expected to be quite different. By mid-year headline CPI would slip towards the BoR's target rate of 4.0%, the prospect of which would see the central bank start to cut interest rates again in the first quarter of that year, with the repurchase rate afterwards being lowered from 10.0% at present to 7.50% by year-end, Jackson said.

As of 1442 GMT the US dollar was just 0.14% higher against the ruble at 63.91.