September 5, 2017 / 3:42 PM / a year ago

UPDATE 1-Russian inflation slows more than thought in August

 (Adds background, and analyst comments)
    MOSCOW, Sept 5 (Reuters) - Russian consumer price growth
slowed more than expected in August, falling in monthly terms
for the first time in six years, data showed on Tuesday, which
analysts believe will leave more room for rate cuts by the
central bank.
    In monthly terms, Russia recorded a deflation rate of 0.5
percent in August after 0.1 inflation the preceding month, data
from the state statistics service showed.
    The central bank said it had expected some deflation in
August but the slowdown in the consumer price index (CPI) had
been greater than forecast.
    In annual terms, CPI rose 3.3 percent in August after
climbing 3.9 percent the previous month. It also came below
analysts' expectations for a rise of 3.7 percent.
    "The bigger than expected ... decline in headline and core
CPI sends a clear signal - disinflationary forces have remained
intact despite some gradual recovery in consumer demand," ING
analysts said in a note.
    "We think the CBR may opt for cutting the key rate by 50bp
at the upcoming...meeting , even though our forecast has so far
been for a 25bp rate reduction."
    The Russian Central Bank is widely expected to trim its key
rate, currently at 9 percent, by either 25 or 50 basis points
when it holds its next board meeting on Sept. 15.
    But the central bank warned on Tuesday that the deflation
was temporary due to a delayed start to grain crop harvesting,
high agricultural production and a lack of storage capacity that
has prompted some farmers to sell products more quickly.
    Inflation will be "close to" its 4 percent target by the end
of the year, the central bank said.
    Rosstat gave the following details: 
     RUSSIAN CPI              Aug 17    July 17   Aug 16 
     Mth/mth pct change       -0.5      +0.1      +0.0
     - food                   -1.8      -1.0      -0.6 
     - non-food               +0.1      +0.1      +0.4
     - services               +0.4      +1.6      +0.3
     Y/Y pct change           +3.3      +3.9      +6.9
     Core CPI y/y pct change  +3.0      +3.3      +7.0
    NOTE - For key Russian indicators click here. 

 (Reporting by Andrey Ostroukh and Jack Stubbs; Editing by Hugh
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