Tariffs on Russian public services were revised upwards by 6.5-7.5%. This fell in line with the preliminary schedule of the tariff services, but brought annual inflation up to 15.7% yoy.



It was not low enough to prevent a spurring on of inflation expectations, especially given that it touched 15.3% yoy in June. Also, some second-round effects could occur as tariffs translate into increased production costs.



"Only this could put policy easing on hold. However, as already seen, depressed consumer demand and real wages still trigger significant demand-pull drivers which will prevent a spurring of price growth", says Societe Generale.



As well, strong seasonal factors are looming such as fruit and vegetable prices during the harvest period in the next two months to contain inflation re-acceleration.



"Finally, some base effects will start emerging at the end of Q3 15 that will help bringing yearly inflation down to 11.6% yoy by end-2015 and promote further deceleration to 8.0% by the end of Q1 16", added Societe Generale.