Russia’s Q2 current account balance likely to decline

Russia CPI inflation for June will be released next week. With inflation dropping rapidly, we expect it to decline to 15.4% y/y from a high of 16.9% in March. This will mean that Q2 inflation has been a little over 1%, implying an annualized rate of just 4%, in line with the CBR medium-term target. Barclays expects, the rate of inflation to increase somewhat due to planned adjustments in utility prices set for July and RUB depreciation since midMay. 

However, the high interest rates and low liquidity growth that has brought inflation under control will persist. Furthermore, the low growth rate is adding to downward pressures on prices. Barclays estimates, Russia's Q2 current account data will be released next week, is expected to decline to about $11bn due to seasonal factors.