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Russia Inflation Accelerates in September on Food

Oct. 4 (Bloomberg) -- Russia’s annual inflation accelerated for a second straight month after the country’s worst drought in at least half a century hobbled agricultural output.

Prices rose 7 percent from a year earlier, compared with 6.1 percent in August, the Federal Statistics Service said today in an e-mailed statement. Consumer prices advanced 0.8 percent from the previous month, after rising 0.6 percent in July. Both figures matched the median estimates in a Bloomberg survey of 15 economists.

“Inflationary pressures intensified in September,” driven by food and metals costs, HSBC Holdings Plc said Oct. 1, citing data compiled by Markit Economics. “Manufacturing growth moderates, while price growth accelerates,” raising the question of whether Russia is heading for “stagflation,” the bank said in a statement.

Russia faces an “acute” grain shortage after record heat triggered crop losses, even with a government-imposed ban on grain exports, according to the Moscow-based researcher SovEcon. Rising food prices may push the inflation rate to 8 percent by year-end, central bank chief Sergey Ignatiev said Sept. 24.

The central bank left its main interest rates unchanged on Sept. 28, saying “inflationary risks, shaped by monetary conditions, are at an acceptable level.”

Bank Rossii will continue monitoring “inflationary processes,” the central bank said in a statement. “Signs of unstable economic growth remain.”

Non-Food Prices

Russia’s manufacturing expansion slowed in September to the weakest pace since March as international demand fell and new export business declined, according to HSBC’s Purchasing Managers’ Index.

Producer prices, an early indicator of inflation, jumped a monthly 3.3 percent in August, according to the statistics office.

Food prices rose an annual 8.7 percent in September, including a 31 percent jump in cereals and legumes, the Federal Statistics Office said today. Non-food prices rose 4.4 percent.

“Stable inflation outside the food sector will allow Bank Rossii to delay the monetary policy tightening cycle,” Maxim Oreshkin, chief strategist for Russia and the Commonwealth of Independent States at Credit Agricole SA, said in an e-mailed note today.

To contact the reporters on this story: Maria Levitov in Moscow at mlevitov@bloomberg.net

To contact the editor responsible for this story: Willy Morris at wmorris@bloomberg.net

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