Bloomberg News

Russian Inflation Slows More Than Forecast to 15-Month Low

December 06, 2011

Dec. 5 (Bloomberg) -- Russia’s inflation rate fell more than economists forecast last month to the lowest level since August 2010 because of a shortage of cash in the economy and weaker food-price growth.

Consumer prices rose 6.8 percent in November from a year earlier after a 7.2 percent increase in October, the Federal Statistics Service in Moscow said in an e-mailed statement today. Prices rose 0.4 percent from a month earlier. Economists had forecast rises of 7 percent and 0.6 percent, according to two surveys.

Prime Minister Vladimir Putin, seeking a return as president next year, has supported the central bank’s goal of capping inflation at a two-decade low of 7 percent. Bank Rossii stopped purchasing foreign currency, while budget spending has lagged behind targets, draining ruble liquidity, said Dmitry Kharlampiev, research director for macroeconomics at OAO Petrocommerce Bank in St. Petersburg.

“What’s happening with inflation now is a result of the interruption in ruble emission,” he said in a Dec. 2 telephone interview. M2, the broad measure of money supply, contracted in October from a month earlier, which is uncharacteristic for this time of year, Kharlampiev added.

Core inflation, which excludes volatile costs such as energy, advanced 0.5 percent in November compared with October, in line with the median forecast in another survey of economists.

Consumer prices rose faster than economists forecast on an annual and monthly basis in October. Price growth in the year through November was 5.6 percent, or 0.2 percentage points less than forecast and down from 7.6 percent in the same period of last year.

--With assistance from Zoya Shilova in Moscow. Editors: Paul Abelsky, Andrew Langley

To contact the reporter on this story: Scott Rose in Moscow at

To contact the editor responsible for this story: Balazs Penz at

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