OREANDA-NEWS. October 20, 2009. Rosstat reported on that producer prices increased by 1.2% MoM in September, but have decreased by 5.5% YoY. Oil & gas prices rose 0.2% MoM, while metals were up 6.6% MoM. By contrast, energy generation and distribution tariffs dropped 0.2% in September, reported the press-centre of OTKRITIE FC.

Rosstat also published estimates for CPI for the first twelve days of October, which stood at zero (as in the previous 2 months). For the same period of 2008 CPI grew by 0.4%. That means that annual inflation can now be estimated at 10.3%, down from 10.7% at the end of September.

View: We regard this new data as positive. It is worth noting that the increase of PPI can be attributed to an increase of prices in export-oriented industries, and to some extent to the restoration of domestic demand. However, from our point of view, the increase should not have a strong effect on CPI. The increase in PPI in certain industries will, without a doubt, increase revenues and improve financials, while the stagnation of regulated tariffs has helped other industries. The revival of demand was also confirmed by positive figures for industrial production in September (released on Thursday). Moreover, the drop of consumer prices will make it easier for CBR to ease monetary policy, mainly in the form of further interest rate cuts. This would also be positive for the economy, and we hope that the Central Bank will continue to be quite aggressive in this area.