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Putin's Food Price Cap May Prove Detrimental to CPI

RUSSIA
  • Local economist warns Putin's moves to cap food prices may result in higher inflation.
  • Retailers may compensate for losses incurred from government-ordered price freezes on sugar and sunflower oil by pushing up the cost of other goods, which in turn will affect expectations - creating risks to a an expedited hiking cycle
  • Audit chamber expects food prices to shoot up when restrictions are lifted at the end of 1Q21
  • Economist also notes price controls could introduce another layer of uncertainty, even if they don't directly affect the outlook for rates.
  • RenCap economist says price caps aren't likely to have a lasting impact on inflation. Continued spike in consumer prices could force the central bank to step in with a rate increase as soon as the middle of the year if it wants to bring inflation back down to the 4% target - bbg
MNI London Bureau | +44 020-3983-7894 | murray.nichol@marketnews.com
MNI London Bureau | +44 020-3983-7894 | murray.nichol@marketnews.com

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