Russian Inflation Slows More Than Forecast to 15-Month Low

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 forecast rises of 7 percent and 0.6 percent, two surveys showed.

The slowdown may help boost Prime Minister Vladimir Putin as he seeks a return as president next year. Putin has backed the central bank’s goal of capping inflation at a two-decade low of 7 percent. More than half of Russians still see the inflation level as “very high,” a poll showed last month.

“The decrease is most likely because of the fairly tight monetary conditions since the start of May,” Alexandra Evtifyeva, an economist at VTB Capital in Moscow, said today by telephone. “The central bank and Finance Ministry have really tightened up liquidity.”

The ruble traded little changed after the report, depreciating 0.2 percent to 30.9096 per dollar at 5:29 p.m. The ruble-denominated Micex Index of 30 stocks extended gains and was 0.5 percent stronger at 1,513.56.

Consumer prices soared in the second half of 2010 after a drought damaged Russia’s harvest, helping push inflation to 8.8 percent by year-end. Food-price inflation slowed to 5.3 percent in November from a year earlier, down from 6.2 percent in October, the statistics service said.

‘Fairly Sharp’

The “fairly sharp” decline is due to a favorable base effect following a surge in food prices last year, Evtifyeva said.

Inflation in the year to date was 5.6 percent, the service said, less than forecast by economists and down from 7.6 percent in the first 11 months of last year.

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.

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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