Rosstat changed estimations of GDP for Q3 2018. According to updated data, Russia's GDP for Q3 2018 amounted to 27007.2 billion rubles at current prices. Index of physical volume of GDP relative to Q3 2017 amounted to 101.5%, relative to Q2 2018 - 106.6%. GDP deflator for Q3 2018 in relation to Q3 2017 amounted to 111.1%. The volume of GDP in January-September 2018 in current prices amounted to 74093.3 billion rubles, the index of its physical volume relative to January-September 2017 amounted to 101.6%. According to preliminary estimates, in December the monthly increase in consumer prices in Russia was 0.8%, accelerating from 0.5% in November. As a result, annual inflation rate reached 4.2% compared to 3.8% in November 2018 (a month earlier growth in prices was 0.4% a year earlier in November). As expected, monthly inflation was lower than the weekly figures suggested, according to which prices rose by 0.8% over the period from December 1 to 24. This discrepancy is explained by the difference in methodology: monthly data are calculated on the basis of a consumer basket with a higher share of services that are more expensive than food products.
More detailed data indicate a further acceleration of food inflation. In December it was 1.7% in monthly terms (against 1% in November), with the result that the annual increase in food prices reached 4.7% (in November – 3.5%).
At the same time, the rise in prices for non-food products slowed down: in December, the monthly figure was 0.2% (compared to November's 0.4%), and the annual figure reached 4.1% (against 4.2% in November). In the service segment, the monthly inflation in December was at the level of 0.4% (in November, prices remained at the level of the previous month), and the annual increase in prices for services was 3.9% (compared to 3.5% in November).
We expect that by the end of 2019, annual inflation will rise to 4.5%, since an increase in VAT may accelerate it by 1.0-1.1%. This means that adjusted for an increase in VAT, inflation will actually slow down against the background of a decline in consumer demand, a more stable ruble exchange rate and a slowdown in the growth of prices for agricultural products in global markets.
As these data show, population consumption increased by 2.1% compared to Q3 2017, whereas in Q2 2018 its annual growth was 2.5%. This change in dynamics was due to the acceleration of inflation. At the same time, for 9M 2018 annual growth in consumption was still at the level of 2.5%. There was a positive trend in investment activity and net exports in Q3 2018. Annual investment growth accelerated to 2.8% in Q3 2018 versus 1% in Q2 2018 (it was 1.9% in 9M18). The acceleration of investment growth (in the system of national accounts) corresponded to an improvement in the dynamics of investment activity (these data were published earlier).