Russian inflation decelerated for the first time since July as the central bank moves to draw a line under the country’s worst currency crisis since 1998 with measures to revive economic growth.
Consumer prices rose 16.4 percent from a year earlier in April, compared with 16.9 percent in March, the Federal Statistics Service in Moscow said in a statement on Wednesday. The median estimate of 21 economists surveyed by Bloomberg was 16.7 percent. Prices gained 0.5 percent in the month.
The dropoff in inflation vindicates a turn by authorities to focus on an economy entering its first recession in six years after a crash in oil prices and sanctions imposed over the conflict in Ukraine. The Bank of Russia has taken advantage of slowing price growth and the ruble’s best performance among currencies globally to roll back December’s emergency increase in interest rates with three cuts in 2015.
“It now looks like inflation has passed its peak,” Liza Ermolenko, an analyst at London-based Capital Economics Ltd., said by e-mail. “The effects of last year’s fall in the ruble have started to ease, which should continue to put downward pressure on inflation over the coming months.”
The ruble strengthened 13 percent in April against the dollar, extending the best rally among more than 170 world currencies tracked by Bloomberg. It traded little changed at 50.5040 versus the dollar as of 6:12 p.m. in Moscow.
In an indication the market anticipates more rate cuts, the yield on Russian five-year local currency notes fell 18 basis points to 10.58 percent. That’s below the central bank’s benchmark rate that was cut to 12.5 percent last week. Derivatives traders also see borrowing costs falling, with forward-rate agreements signaling 147 basis points of decreases in the next three months.
The central bank last week said it’s ready to ease further and estimated inflation will slow “faster than expected,” predicting price growth will reach 8 percent next April.
Russia is getting a respite from inflation after it soared to the fastest since 2002 following last year’s 46 percent drop in the ruble and President Vladimir Putin’s ban on some food imports in retaliation for sanctions. It remains at more than fourfold the central bank’s medium-term target of 4 percent for 2017.
Weekly price growth has moderated to 0.1 percent last month after growing as much as 0.9 percent in February. Manufacturers reported a deceleration in input price inflation to a 15-month low in April, according to a report released by HSBC Holdings Plc and Markit Economics on Tuesday.
The economy has eclipsed inflation as the top concern for most Russians, according to a survey published in March by state polling company VTsIOM. Gross domestic product may contract as much as 4 percent in 2015 and 1.6 percent in 2016, according to the central bank’s base-case scenario published in March.