CPI monitor: Fall of the vegetable barricades

Deflation decelerated over the September 6-12 period, with consumer prices falling by 0.03% WoW (vs. -0.13% the previous week). The key factor behind the slower decline of consumer prices was the end of seasonal deflation in vegetables due to the recent cold snap.
Ahead of tomorrow’s CBR meeting, changes in stable CPI components are of special interest and not the seasonal dynamic. According to our estimates, they remain below the CBR’s target level and have been gradually decelerating lately. Their safe dynamic depends on restrained consumption, which has continued to contract since September. Therefore, given the mild deterioration of household inflationary expectations in September, we expect the CBR to lower the key rate by 50 bps to 7.5%.