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Monthly Analytical Note "Inflation Analysis" (October 2011)


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The Consumer Price Index (hereinafter - the CPI) remained unchanged, compared with the previous month (the CPI declined by 0.6%, excluding seasonal factor). On a year-on-year basis, CPI growth slowed down to 5.4%. The CPI has increased by 4.2% since the start of the year.


A key factor in curbing CPI growth is a bumper crop, in particular, of fruit and vegetables. A drop in prices for fruit and vegetables (by 6.2% and 3.1% respectively) contributed most to the downward trend in the prices for raw foods, which decreased by 0.5% in October (contribution to the change in the CPI stood at “minus” 0.1 p. p.).  


Administratively regulated prices for commodities and services declined by 1.2% (contribution to the change in the CPI stood at “minus” 0.2 p. p.) owing to a sharp drop in sugar prices (-11.9% over a month), being a component of this price index. There was a 0.3% rise in utility prices (another component of the price index). World oil prices remained stable (for a third successive month Brent crude oil prices stood at 110±1 USD), which entails a slow rise in fuel prices (by 0.4% over a month). It entailed a 0.7% decline in the non-core CPI (contribution to the CPI made up “minus” 0.3 p. p.). The non-core CPI growth year-on-year slowed down to 2.8%.


The key factor behind the increase in the core CPI in October (by 0.6%, contribution to the CPI made up 0.3 p. p.) was a rise in prices for deeply processed foodstuffs (a month-on-month change stood at 1.0%, contribution to the core CPI made up 0.4 p. p.).


The strengthening of the nominal exchange rate (10.9% since April 2011) and demand below its potential curbed price increases for other components of the core CPI (according to the estimates made by the Department, the GDP gap remains negative, standing at “minus” 0.3% in the third quarter of 2011). It partly compensates for an increase in the inflation registered in the partner countries. As a result, there was a 0.4% increase in the narrow core CPI over a month, on a year-on-year basis - by 2.9%).


October saw a 1.8% fall in the producer price index (hereinafter - the PPI), which was mainly driven by a decline in the prices for production and distribution of electric power, gas, and water (month-on-month change stood at “minus” 6%, contribution to the CPI made up “minus” 1.2 p. p.). A slight slowing in economic activity entailed a decrease in prices for products of export-oriented industries. The annual growth rate of PPI slowed down to 16.3%.


The complete wording of the analytical note has been posted on the official website at:



Last modification   30.11.2011