Price growth has slowed down

The main reason is the leaving the sharp increase calculations in March 2022

Inflation dropped sharply to 18.1% by the end of March. The greatest contribution to the annual price growth was made by food products (8.4%), housing and utility services (2.1%), clothing and footwear (1.6%) and household items (1.4%).

• Food products increased by 20.5% (26.2% in February);
• Non-food products increased by 18.1% (20.5%);
• Market services increased by 14.4% (15%).

The observed inflation slowdown in annualized terms was expected and is almost due to the technical effect. The weak decline in service inflation confirms our concerns that it may become the key factor in the increased overall inflation rate in the coming months.

The monthly dynamics of price growth are also of interest. The released statistics show that the growth of consumer inflation in March was only 0.9% by February 2023, which is significantly lower than the previous 1.3% (the rate of monthly inflation growth in March was always lower than in February historically). And a return to the historical "pattern", an improvement in expectations observed according to February data, may be signs of stabilization of inflationary processes.

In general, the results of March fit our forecasts and the regulator's outlooks. We believe that the current figure is NOT a reason to switch to a soft monetary policy. This Friday, we are expecting the base rate to remain at the current level of 16.75%.