Producer prices increased by 0.5% in February reflecting an impact of dear oil on prices of other products, rising metal prices and accelerating inflation in food prices. Oil prices soared above 100 USD/barrel; however, we saw a direct impact on prices of refinery products in March. But previous gains in oil prices passed through the prices of chemical products (+3.9% mom), plastics and rubber (+0.8% mom).
PPI in February also mirrors previous increase in prices of iron ore, coal, steel and nonferrous metals. Relevant sub-index in PPI rose by 1.0% mom last month and annual inflation already reached 12.4 %. Farmers’ prices jumped by another 5.1% mom (30% yoy) and lifted food prices in PPI by 0.5% (5% yoy). We can expected the same category in CPI to continue rising in coming months.
Inflation in producer prices stems mainly from external factors, however; the central bank may worry about the second-round effects on inflation. Thus, rising PPI lends support to hawkish view on rates. We expect the first rate hike to come in the third quarter.
Actual (February): 0.5% mom; 5.4% yoy
Consensus: 0.4% mom; 5.2% yoy
Previous (January): 1.4% mom; 4.6% yoy