Russia November Inflation Rate Probably Fell to 14-Month Low

Russia’s inflation rate probably fell last month to the lowest since September 2010 because of a shortage of cash in the economy and weaker food-price growth.

Consumer prices rose 7 percent from a year earlier after a 7.2 percent increase in October, according to the median of 15 economist estimates in a Bloomberg survey. Prices probably rose 0.6 percent during the month, a second survey showed. The Federal Statistics Service in Moscow will publish the data after 4:30 p.m. today, the service said on its website.

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 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, a measure of money in the economy, contracted in October from a month earlier, which is uncharacteristic for this time of year, Kharlamiev added.

The MosPrime rate, an average of banks’ quoted rates to lend each other rubles for three months, has surged 259 basis points, or 2.59 percentage points, since the start of August to 6.89 percent on Dec. 2. That was 3 basis points off a nearly two-year high of 6.92 percent on Nov. 30.

Putin Election Setback

The ruble has gained 4.2 percent against the dollar this quarter, the third-best performance among 31 major currencies tracked by Bloomberg after the Australian dollar and the Brazilian real.

Putin’s party failed to win a majority in parliamentary elections yesterday, according to preliminary results, dealing the Russian leader his first electoral setback since he came to power a decade ago.

United Russia’s won 49.5 percent of the vote, compared with 64.3 percent in 2007, the Central Election Commission said on state television, citing results from 96 percent of votes counted.

Fifty-eight percent of Russians said inflation was “very high” last month, unchanged from May when prices rose 9.6 percent, according to a poll published last month by the All-Russia Center for the Study of Public Opinion.

Food Inflation

Consumer prices rose faster than economists forecast both from a year earlier and a month earlier in October. Price growth in the year through November may be 5.8 percent, compared with 5.2 percent in October and 7.6 percent in the same period of last year, according to the median of 11 estimates in a Bloomberg poll.

“Food prices aren’t contributing to the general price level as much as they did last year,” Ariel Chernyy, an analyst at Allianz Rosno Asset Management in Moscow, said Dec. 2 by e-mail. While food inflation “started to accelerate in October, weather conditions have been better this year.”

Core inflation, which excludes some volatile data, probably advanced 0.5 percent in November compared with October, a separate survey showed.

Consumer prices surged in the second-half of last year after a drought damaged Russia’s harvest, helping push inflation to 8.8 percent on the year.

“The weekly inflation data, starting from the second half of last month, show that there has been something of a slowdown in price growth,” Kirill Tremasov, an economist at OAO Nomos Bank in Moscow, said Dec. 2 in a telephone interview. “I think there’s a chance to keep growth to 0.5 percent” from a month earlier.