February 7, 2018 / 3:16 PM / a year ago

UPDATE 1-Russian January inflation slows to record low 2.2 pct yr/yr

 (Adds context)
    MOSCOW, Feb 7 (Reuters) - Russia's consumer price index fell
to a record low of 2.2 percent in January year-on-year, the
state statistics service said on Wednesday, leaving more room
for the central bank to cut interest rates on Friday. 
    The increase was smaller than the forecast of analysts
polled by Reuters, who on average predicted an increase of 2.3
percent in the first month of the year. Inflation stood at 2.5
percent in December.
    Inflation slowed to 0.3 percent in monthly terms from 0.4
percent in December, the data showed. 
    Russian inflation, once stubbornly high at double-digit
levels, is now significantly below the central bank's target of
4 percent. 
    Lower inflation leaves more room for the Russian central
bank to cut its key rate before March's presidential election,
making it cheaper to get credits and take out mortgages. 
    A Reuters poll showed 18 of 20 analysts expected the central
bank to cut its benchmark rate a quarter-point to 7.5 percent
from 7.75 percent when it meets on Friday.
    Following the new inflation figures, analysts at Capital
Economics said they now predicted the central bank would cut by
50 basis points on Friday, compared with an earlier forecast of
25 basis points. 
    "The decline in Russian inflation to just 2.2 percent
year-on-year last month, coming alongside weakness in the latest
hard activity data and dovish comments from central bank
governor Elvira Nabiullina, means we now expect a 50-basis-point
cut in the policy rate," they said in a note. 
    Rosstat gave the following details: 
     RUSSIAN CPI              Jan 18    Dec 17    Jan 17 
     Mth/mth pct change       +0.3      +0.4      +0.6 
     - food                   +0.5      +0.6      +0.9 
     - non-food               +0.3      +0.3      +0.5 
     - services               +0.1      +0.3      +0.5
     Y/Y pct change           +2.2      +2.5      +5.0
    NOTE - For key Russian indicators click here.

 (Reporting by Polina Nikolskaya and Zlata Garasyuta, writing by
Polina Ivanova and Jack Stubbs, editing by Katya Golubkova and
Larry King)
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