(Adds context, analyst comments)
By Jason Bush
MOSCOW Jan 9 Russia saw a slight pick-up in headline consumer price inflation in December, although a moderation in underlying price pressures suggests the central bank may keep interest rates on hold for now.
The data, which was in line with forecasts, suggests that after recently hiking rates to clamp down on price rises, the central bank is likely to shift its focus towards boosting economic growth.
Headline consumer price inflation rose to 6.6 percent in December and in 2012 as a whole from 6.5 percent in November and 6.1 percent in 2011, data published by the Federal Statistics Service on Wednesday showed. That was above the central bank's official 5-6 percent target range for the year.
But core inflation, which strips out volatile food and energy prices, rose by 5.7 percent compared with a year earlier - an improvement on November when annual core inflation was 5.8 percent.
"Inflation has probably already peaked in terms of general inflationary pressure and inflation expectations," said Dmitry Polevoy, Russia economist at ING.
"This data confirms that the central bank is likely to stay on hold (with interest rates) in the coming months and will continue monitoring (economic) growth performance."
A poor harvest last summer, coupled with the impact of increases in household utility prices that were delayed from before Presidential elections last March, led inflation to pick up sharply in the second half of last year from a post-Soviet low of 3.6 percent in April.
Concerns about the rapid acceleration led the central bank to raise all its main interest rates by 25 basis points last September, despite concerns that tighter monetary would crimp economic growth.
But a surprise fall in inflation in November was a sign that higher food prices had not fed through into inflationary expectations as many had feared, suggesting that the one-off monetary tightening in September had succeeded in containing the problem.
The decline in core inflation in December provided further evidence that despite the rise in the headline rate, underlying inflation pressures are moderating.
Analysts polled by Reuters late last month forecast that the central bank would begin cutting interest rates in the second quarter, as its concerns shift from controlling inflation towards stimulating the slowing economy.
They forecast that inflation would fall to 6.1 percent by the end of 2013 - slightly above the central bank's 5-6 percent target for the year.
"We may still see higher headline inflation in the months ahead as a result of the low base effect, because (early) last year we had very low inflation," said Polevoy. "But the slowing down in core inflation shows that inflation worries were slightly exaggerated this autumn." (Reporting by Jason Bush)