1/5/15: Russian Economy: Latest Forecasts and Debates

Russian economy has been surprising to the upside in recent months, although that assessment is conditioned heavily by the fact that 'upside' really means lower rate (than expected) of economic decline and stabilised oil prices at above USD55 pb threshold. On the former front, 1Q 2015 decline in real GDP is now estimated at 2.2% y/y - well below -3% official forecast (reiterated as recently as on April 1) and -2.8% contraction forecast just last week, and -4.05% consensus forecast for FY 2015. It is worth noting that contraction in GDP did accelerate between February (-1.2% y/y) and March (-3.4% y/y). 2Q 2015 forecast remains at -3%.

In line with this, there have been some optimistic revisions to the official forecasts. Russian economy ministry has produced yet another (fourth in just two months) forecast with expected GDP decline of 2.8% this year. Crucially, even 2.8% decline forecast figure still assumes oil price of USD50 pb. Similarly, the Economy Ministry latest forecast for 2016 continues to assume oil at USD60 pb, but now estimates 2016 GDP growth at +2.3%

These are central estimates absent added stimulus. In recent weeks, Russian Government has been working on estimating possible impact of using up to 80% of the National Welfare Fund reserves to boost domestic infrastructure investment. This is expected to form the 3 year action plan to support economic growth that is expected to raise domestic investment to 22-24% of GDP by 2020 from current 18%. The objective is to push Russian growth toward 3.5-4% mark by 2018, while increasing reliance on private enterprise investment and entrepreneurship to drive this growth.

An in line with this (investment) objective, the CBR cut its key rate this week by 150bps to 12.5%. My expectation is that we will see rates at around 10%-10.5% before the end of 2015. From CBR's statement: "According to Bank of Russia estimates, as of 27 April, annual consumer price growth rate stood at 16.5%. High rates of annual inflation are conditioned primarily by short-term factors: ruble depreciation in late 2014 — January 2015 and external trade restrictions. Meanwhile, monthly consumer price growth is estimated to have declined on the average to 1.0% in March-April from 3.1% in January-February, and annual inflation tends to stabilise. Lower consumer demand amid contracting real income and ruble appreciation in the recent months curbed prices. Inflation expectations of the population decreased against this backdrop. Current monetary conditions also facilitate the slowdown in consumer price growth. Money supply (M2) growth rate remains low. Lending and deposit rates are adjusted downwards under the influence of previous Bank of Russia decisions to reduce the key rate. However, they remain high, on the one hand, contributing to attractiveness of ruble savings, and, on the other hand, alongside with tighter borrower and collateral requirements, resulting in lower annual lending growth."

There is an interesting discussion about the ongoing strengthening in Russian economic outlook here: https://fortune.com/2015/04/29/russia-economy-resilience/. Here's an interesting point: "Russian-born investment banker Ruben Vardanyan pointed out that the collapse of the ruble left much of the economy untouched, with roughly 90% of the population not inclined to buy imported goods. And that population, Vardanyan points out, has only increased its support for Vladimir Putin in the months following the imposition of sanctions." I am not so sure about 90% not inclined to buy imports, but one thing Vardanyan is right about is that imports substitution is growing and this has brought some good news for producers in the short run, whilst supporting the case for raising investment in the medium term.


Meanwhile, The Economist does a reality check on bullish view of the Russian economy: http://www.economist.com/news/finance-and-economics/21650188-dont-mistake-stronger-rouble-russian-economic-recovery-worst-yet.

The Economist is right on some points, but, sadly, they miss a major one when they are talking about the pressures from USD100bn of external debt maturing in 2015.

Here is why.

Russia's public and private sector foreign debt that will mature in the rest of this year (see details here: http://trueeconomics.blogspot.ie/2015/04/14415-russian-external-debt-redemptions.html) does not really amount to USD 100bn.

Foreign currency-denominated debt maturing in May-December 2015 amounts to USD68.8 billion and the balance to the USD100bn is Ruble-denominated debt which represents no significant challenge in funding. Of the USD68.8 billion of foreign exchange debt maturing, only USD2.01 billion is Government debt. Do note - USD611 million of this is old USSR-time debt.

Corporate liabilities maturing in May-December 2015 amounts to USD45.43 billion. Of which USD12.46 billion are liabilities to direct investors and can be easily rolled over. Some USD963 million of the remainder is various trade credits and leases. Also, should the crunch come back, extendable and cross-referenced. Which leaves USD32.07 billion of corporate debt redeemable. Some 20% of the total corporate debt is inter-company debt, which means that - roughly-speaking - the real corporate debt that will have to be rolled over or redeemed in the remaining months of 2015 is around USD26-27 billion. Add to this that Russian companies have been able to roll over debt in the markets recently and there is an ongoing mini-boom in Russian corporate debt and equity, and one can be pretty much certain that the overall net burden on foreign exchange reserves from maturing corporate debt is going to be manageable.

The balance of debt maturing in May-December 2015 involves banks liabilities. All are loans and deposits (except for demand deposits) including debt liabilities to direct investors and to direct investment enterprises. Which means that around 25-33% of the total banks liabilities USD26.57 billion maturing is cross-referenced to group-related debts and investor-related liabilities. Again, should a crunch come, these can be rolled over internally. The balance of USD19.9 billion will have to be funded.

So let's take in the panic USD100 billion of foreign debt claimed to be still maturing in 2015 and recognise that less than USD50 billion of that is likely to be a potential (and I stress, potential) drain on Russian foreign exchange reserves. All of a sudden, panicked references in the likes of The Economist become much less panicked.

Meanwhile, Russian economy continues to post current account surpluses, and as imports continue to shrink, Russian producers' margins are getting stronger just as their balance sheets get healthier (due to some debt redemptions). It's a tough process - deleveraging the economy against adverse headwinds - but it is hardly a calamity. And The Economist, were it to shed its usual anti-Russian biases, would know as much.

That said, significant risks remain, which means that a prudent view of the Russian economy should be somewhere between The Economist's scare crow and the Fortune's and the Economy Ministry's cheerleading. Shall we say to expect, on foot of current data and outlook, the 2015 GDP growth to come in at -3.5-4%, with 2016 economic growth to come in at +1.5-2%?

1/5/15: Irish Manufacturing PMI: April 2015

Irish Manufacturing PMI is out today for April (compiled by Markit, sponsored by Investec), posting another strong reading at 55.8,

As the chart above indicates, current 12mo average is at robust 56.1 and 3mo average is 56.7. In 3mo through January 2015, the indicator averaged 56.1, which suggests the latest 3mo performance was stronger then the previous one. 3mo average through April 2015 is well ahead of the same period average for 2014 (54.8) and 2013 (49.4). Overall, these are strong numbers, although much of the spectacular growth is probably accounted for by the fabled Contract Manufacturing schemes that are used by some MNCs to book value added for production taking else where into Ireland for tax purposes.

April reading continues the period - 20 months and counting - of continued readings that are statistically significantly above 50.0. However, momentum growth is weakening and remains static from around August 2014. Still, this is the second order derivative, with the overall rate of growth being signalled by the PMI remaining robust.

30/4/15: Consumer Confidence Boom in April... or Hopium by Pints

Ah, that slightly delirious Consumer Confidence data from Ireland keeps getting more and more delirious. April reading for the ESRI-compiled, KBC-sponsored, Consumer Confidence indicator was 98.7, up on 97.8 in March and the second highest reading since January 2005. The highest was in January 2015.

So now we have: on a 3mo average basis, 3 months through March, retail sales shrunk 0.2% in value terms and rose by 1.07% in volume terms. But in 3 months through April 2015 consumer confidence was up 5.7% (we have data lags here, so looking at latest data). And it gets worse: compared to January 1, 2015, retail sales by value are up 1.4%, down by 0.74% in volume, and consumer confidence is up 9.1%.

Hopium deliveries going strong nowadays...

29/4/15: China's Debt Pile is Frightening & Getting Worse

Just catching up on some interesting data on China, courtesy of @AmbroseEP, showing debt to GDP ratios for China's real economy:

Now, note that the comparatives are all advanced economies that can carry, normally, higher debt levels. Which makes China's 282% estimated total debt pile rather large.

The chart references as a source data presented in this (see scone chart) http://trueeconomics.blogspot.ie/2015/03/5315-troika-tale-of-irish-debt.html but adjusted to reflect RBS estimates. which pushes McKinsey point for China horizontally to the levels close to Greece.

As someone else pointed out, nominal GDP growth in China is apparently now lower than interest on debt.

Meanwhile number of stock market accounts has gone exponential in recent days - using borrowed money (Chinese residents borrowed over Yuan 1 trillion or Euro150 billion worth of cash to pump into stock markets):

Economy is clearly slowing down in China, with conflicting reports and estimates of 1Q 2015 growth suggesting possible contraction in the real economy and domestic demand. (See http://www.irishtimes.com/business/economy/china-equity-markets-boom-while-economic-growth-stutters-1.2182547).

At the top of debt chain are local authorities: latest official data shows borrowings by the local authorities were up by almost 50% since the start of H2 2013 to c. 16 trillion yuan. Local authorities debt growth accounts for a quarter of changes in overall domestic debt since 2008. Recently, the IMF warned China that the country overall economic debt is expanding at a faster pace than debt in Japan, South Korea and the U.S. grew before the onset of the Global Financial Crisis.

My view: when this pile of Chinese debt blows, things will get spectacularly ugly, globally.

29/4/15: Irish Retail Sales 1Q 2015

As I mentioned in a related post (http://trueeconomics.blogspot.ie/2015/04/28415-irish-retail-sales-march-2015.html), covering monthly data for Irish retail sales, last night, we can take a look at Q1 data comparatives for the sector based on 3mo averages for each corresponding quarter.

Here are the results y/y:

Good news is that overall only two sectors posted declines in Value of retail sales index in 1Q 2015 compared to 1Q 2014. These are both related to the decline in prices of fuel and wholesale prices declines for the Department Stores sales. All categories posted increases in volume of sales.

Large y/y increase in sales were recorded in 1Q 2015 in:

• Motor Trades: up 22.7% in volume and up 20.6% in value of sales
• 'Other sales': up 15.8% y/y in volume and up 6.8% in value
• Books, newspapers, stationery & other: up 13.8% y/y in volume and up 5.7% in value
• Household equipment: up 11.8% in volume and up 7.1% in value
• Electrical goods up 11.8% in volume and 6.1% in value

As the result of this, Non food, ex-motors, auto fuel & bars sales rose 8.3% in volume and were up 3.6% in value terms compared to 1Q 2014. Food posted weaker sales growth at 4.2% y/y in volume and 2.3% in value.

Note: Retail Sales Activity Index is a simple average of Value and Volume indices

As chart above shows, in broader categories terms,

• All Retail sales index of value of sales rose 6.1% y/y in 1Q 2015, while volume of sales index was up 9.9%. Strong showing driven heavily by the motor sales.
• Core retails sales (ex-motors) were up 1.3% y/y in value terms and up 5.2% in volume terms in 1Q 2015.
• Stripping out motors, automotive fuel and bars, retails sales rose 2.8% in value terms and were up 6.0% in volume terms. Again, strong showing over the quarter.

Chart below presents 1Q 2015 index reading against pre-crisis peak for 1Q period:

As the chart above clearly shows, the problem of weak retail sales, compared to pre-crisis levels, remains. Only three categories of sales have regained their pre-crisis peaks as of the end of 1Q 2015 in volume of sales terms. No category of sales has managed to regain pre-crisis peaks in value terms.

In discretionary spending categories terms, relating to normal consumption (stripping out auto fuel, food and motors), things remain under water in both volume of sales and value of sales terms. So things are getting better, but remain ugly in the sector.

The picture for 1Q 2015 is consistent with weak, but improving demand side in the economy.

This positive side of the National Accounts story is at risk, as it reflects deflationary environment where households are experiencing improved real incomes on stagnant wages and disposable nominal incomes. Any uptick in inflation can easily derail the recovery in the sector in terms of volumes of sales, if consumers start withdrawing their demand on foot of reduced opportunities for value shopping. Any uptick in inflation coupled with a rise in interest rates will present a double squeeze on consumer demand through reduced real incomes and reduced incomes available to fund consumption after housing and debt financing costs are taken into account.

28/4/15: Irish Retail Sales: March 2015

So the Spring Statement (http://trueeconomics.blogspot.ie/2015/04/28415-there-is-spring-there-was.html) put quite an emphasis on domestic demand growth, while the retail sales data published today is not exactly encouraging.

Stripping out motor sales, and focusing on core retail sales:

• Seasonally adjusted index for value of retail sales fell from 98.0 in February 2015 to 97.1 in March 2015. March reading is now the lowest  for 6 months and below the 3mo average (1Q 2015 average) of 97.7.
• Seasonally-adjusted index for volume of retail sales also fell from 107.6 in February to 106.6 in March, posting the lowest reading in 4 months.
• Meanwhile, Consumer Confidence indicator from the ESRI was up in March at 97.8 compared to February reading of 96.1.

Some more longer-range comparatives: in 4Q 2014, value index was up 0.2% compared to 3Q 2014, but in 1Q 2015 it was down 0.48% on 4Q 2014. In 4Q 2014, volume index was up 0.69% compared to 3Q 2014, but in 1Q 2015 it was down 0.25% on 4Q 2014. Again, as with monthly changes, 1Q 2015 3mo average for consumer confidence index was up 2.54% which is below 3.9% increase in the index for 4Q 2014 compared to 3Q 2014.

Looking at unadjusted series gives us year on year comparatives basis. So again, for core retail sales (ex-motors):

• Value of retail sales was up 2.34% y/y in March 2015, having previously posted a 0.77% rise in February. A large chunk (just around 1/3rd) of March 2015 increase was down to March 2014 y/y drop of 0.77%. But 2/3rds of March 2015 rise were due to organic growth. Which is good.
• Volume of retail sales rose robust 6.1% y/y in March 2015, having posted growth of 5.04% y/y in February.
• On 3mo average basis, 1Q 2015 value index is at 91.2 which is up 1.3% y/y - again, good news, as value index performance has been weak due to weak prices. Volume 1Q 2015 index was up 5.2% y/y. As usual, Consumer Confidence broke the back of both retail sales indicators, rising 15.1% in 12 months through 1Q 2015.

Summary: People are hopping mad with confidence, buying rather more stuff in volume, but only on foot of finding value in prices. This is not too boisterous, but on the net not too bad either. Monthly trends are a bit more concerning with declines in both March figures and 1Q 2015 averages.

I will look at sectoral comparatives in the next post.

28/4/15: There is a Spring... There was a Statement...

This Spring Statement was a lengthy and over-manned delivery of the vintage "A Lot Done. More to Do." 2002 FF slogan. As such, it is inevitable that the Statement ended up sounding like a self-congratulatory pre-electioneering platform announcement with some promises for the future. And you can read the Department document here: http://budget.gov.ie/Budgets/2015/Documents/SPU%20for%20Web.pdf in its full glory.

'Entrepreneur' or 'Entrepreneurship' are words not mentioned in the document. Self-employed are cited only once, in reference to timing of tax receipts the Government expects from them. Part-time workers - the crucial category that can drive up ranks of early stage entrepreneurs and can be a source for huge gains in productivity if their skills are increased forward - deserves only two mentions, both relating to the unemployment reductions trends to-date. Quality of jobs creation is un-addressed. And so on...

In his speech, Mr Noonan said the government is in a position to implement another expansionary Budget this year and every year out to 2020 “if this is deemed prudent and appropriate.” The "if" part - crucial as it may be - is hardly enforceable, once the train of spending rolls out into the station.

The Government deserves credit. The national deficit was reduced from €15 billion to €4.5 billion over 2011-2015. This was achieved with less tax increases and expenditure cuts than forecast at the onset of 2011. Minister Noonan is correct. But much of this was down to good fortunes from abroad. And still is. And, based on the Department of Finance projections still will be, if one to trust their outlook for the exchange rates, exports growth and jobs growth.

Per Minister Noonan, the state has, this year “fiscal space of the order of € 1.2 billion and up to € 1.5 billion… for tax reductions and investment in public services." So, “the partners in Government have agreed that [this] will be split 50:50 between tax cuts and expenditure increases …in Budget 2016.”

Does that make much sense? Well, no. 2014-2015 cumulated decrease in deficit can be broken down into:
- 50% from increased tax revenues,
- 14% to GDP growth,
- 9% to reduction in net Government expenditure and
- 27% other factors.
Jobs creation and wealth creation both require reducing burden of State and taxation on self-employed and early stage entrepreneurs. Who, both, went totally unmentioned in the Spring Statement. Domestic demand growth - that supposed to contribute 2/3rds of 2015 growth and more than 3/4 of 2016 growth - requires reducing household and corporate debt and stimulating domestic investment - preferably not in property sector. These too went un-mentioned in the Spring Statement.

Instead, we got Minister Howlin watershed discovery that the Government creates wealth.

Which is scary and even scarier in the context of missing real wealth creators in the Statement: the Government's role in wealth creation should be to remove itself from managing it as much as possible. But see more on this below.

Minister Noonan warned that returning to the days of “if I have it I’ll spend it” or the “even if I don’t have it I’ll spend it” policy stance taken by the opposition over the past four years, was by far the biggest risk to economic growth and job creation. He might be right, but his plan for expansionary Budgets into 2020 is more of a policy stance consistent with "I might have it, so I'll spend it".

“We must never again repeat the boom and bust economic model. Over the remainder of this decade we expect all sectors of the economy to contribute to growth and employment.”

He is right on this and the Government said much the same over and over again. But it is hard to see any coherent strategy emerging from the Government's numerous reiterations of Jobs and Growth plans and white papers on how broad growth can be delivered. To-date, the Government projected the same policy approach to growth as its predecessor - targeted supports and tax incentives. Not levelling the playing field, getting rid of state inefficiencies, political interference and tax-and-spend redistribution of resources. Note: this is not about redistribution of income. It is about allowing the economy to grow without political meddling and favouritism.

The Spring Statement was not much of a departure from the same. In the statement, the Minister mentions just one 'red line' policy item - the 12.5% corporation tax. Everything else is more of an IOU based on "if - then". Which suggests that this Government has little in terms of new economic growth ideas beyond corporate tax measures.

Mr Noonan said the mistakes that left the country on the verge of bankruptcy in 2010 must never again be repeated. Which begs a question: does Minister Noonan recognise the mistakes, linked to 2010, that this Government also participated in - willingly or not? Banks recapitalisations were carried out in 2011 on foot of 2010 policy decisions. Troika MOU - shaped in 2010 - was implemented by this Government. Bondholders bailouts were completed by the present Government on foot of mistakes made by the previous one.

Minister Noonan also referenced a promise to "give people security around their income and their pensions". But it is very hard to see how this can be achieved, given lack of any serious progress on dealing with legacy debts and the 50:50 split between tax reductions and expenditure increases in Government budgets forward. And on the point of debt, we do have a massive Government debt, now being augmented by the quasi-Government non-Government debt of the likes of Irish Water et al. Remember, expenditure increases do not improve people's incomes and pensions, except for the select few in State employment and contracting. Nor do they improve Government ability to deleverage its own debt.

And on that note, the Department of Finance says little about actual interest rates, but does project relatively benign debt-related costs through 2020. Which might be tad optimistic, given we are currently scraping the bottom of the historical rates barrel. The Department says that "While unlikely in the short term, higher policy-induced interest rates would have a dampening impact on Ireland’s economic activity. Simulations suggest that a 1 percentage point increase in policy interest rates could reduce the level of GDP by almost 2½ percentage points by 2020. This effect is especially pronounced given the large debt overhang. Such a deterioration in the economy would add almost 1 percentage point to the budget deficit by 2020". I know we all 9ok, not 'we' but almost 'all') expect the current interest rates to stay here forever, because, obviously the ECB is not going to raise them any time in the future under the 'new normal' of complete oblivion to the reality. But here's a bad news: current ECB rates are some 300bps below the pre-crisis average. And if we are moving out of crisis, that average is moving closer and closer in time. So for testing that 100 bps rate rise that the DofF did in the Spring Statement: try 300 bps next. And see the whole promise of the golden future go puff in a cloud of smoke.

Moving on through the Statement: it is also hard to spot any serious momentum for pensions reforms that can really be productive in restoring some capability of the private sector workers to secure pensions. The Government has all but abandoned the idea of pensions reforms in the public sector - the biggest drain on pensions resources in the country.


In summary, the Spring Statement is a call to the voters to support the status quo based on the idea that 'our continuity is less painful than opposition's change'. Which, of course, is an equivalent to giving a granny a choice of being mugged by the "Thank you, Mam" lads with school ties or by the rude villains in clowns' wigs. It is a choice. Just not the one many would order on their elections' menu after six years of economic and social bloodletting. 

Irish Times summed this up as "The spring statement can be seen as a political exercise in which Fine Gael and Labour adopt a common fiscal plan for the election campaign to come." (see http://www.irishtimes.com/business/economy/spring-statement-analysis-assumption-nothing-goes-askew-1.2191971?utm_content=sf-man) and my favourite political analyst in this country, summed it up much better: http://thejacktrack.blogspot.ie/2015/04/michael-noonans-2-billion-return-to.html?spref=fb who says: "there was a haunting echo of Bertie Ahern and Charlie McCreevy resonating through the halls of his Department, and with it the emergence of a disturbing - if hardly, at this stage, surprising - sense that in Ireland there is no such thing as a lesson learned, only a lesson observed."

24/4/15: Greek Debt Maturities through 2016

Greek debt maturities out through 2016.

24/4/15: Business Climate: Germany and Euro Area 1Q 2015

The Ifo Business Climate Index for German trade and industry rose to 108.6 points in April from 107.9 points last month based on the latest data. Using historical time series, current reading signals growth in excess of 2%.

However, Q1 2015 was relatively weak for German indicators.

Present situation index for Germany in Q1 2015 was 112.0 against 115.2 a year ago. Expectations for the next 6 months index was 103.9 in Q1 2015 against 106.3 a year ago. Economic Climate index - overall index of activity - in Q1 2015 stood at 107.9 down on 110.6 in Q1 2014.

German performance in Q1 2015 was reflective of a similar trend in the euro area. Euro area present situation index in Q1 2015 was at 117.5 - well below 120.3 recorded in Q1 2014, while 6months forward expectations index was at 109.8 against 119.7 a year ago. Overall, euro area economic climate index finished Q1 2015 at 112.7, which was below 119.9 recorded at the end of Q1 2014.

Unless April reading signals sustained uplift for Q2 2015, things are not exactly exciting.

24/4/15: Migration and Economic Development: CFR Q2 2015

My column for the Cayman Financial Review this quarter covers the issues of economic development and migration: http://caymanianfinancialreview.cay.newsmemory.com/ go to page B20-21.

Alternative link, here: http://www.compasscayman.com/cfr/2015/04/22/Migration-trends-and-economic-development/

23/4/15: Why is Investment Weak?

Despite all the QE and accommodative monetary policies, despite all the state funding directed toward new lending supports, and despite unorthodox measures aimed at inducing the banks to lend into the economy, the following took place in the advanced economies over the course of the Great Recession:
1) financing conditions globally have first tightened (during the Global Financial Crisis) and then eased, in majority of the advanced economies reaching the levels of stringency comparable to pr-crisis peak;
2) cost of borrowing fell on pre-crisis levels across all advanced economies with exception of a handful of countries; and
3) investment remains weak.

Want to see the problem illustrated?

Banerjee, Ryan and Kearns, Jonathan and Lombardi, Marco J., (Why) is Investment Weak? (March 2015, BIS Quarterly Review March 2015: http://ssrn.com/abstract=2580278) ask: What explains this apparent disconnect?

Per authors, "The evidence suggests that, historically, uncertainty about the future state of the economy and expected profits play a key role in driving investment, and financing conditions less so. As a result,
investment after the Great Recession appears to have been broadly in line with what could have been expected based on past relationships. A stronger recovery of investment would seem to depend on a reduction in economic uncertainty and expectations of stronger future growth."

As I argued in the paper on the European Capital Markets Union (CMU) proposal here: http://papers.ssrn.com/sol3/papers.cfm?abstract_id=2592918 - you might think that lack of investment is because markets for credit supply are dysfunctional. But you can also think of the demand side: if there is no growth prospect ahead, why invest in new capacity? And taking the second view, the prescription for solving the problem is: growth. Which requires improved prospects for investors, entrepreneurs, SMEs and, above all else - households.

23/4/15: Ireland 'Crazy Jumping' Stats: Producer Prices March 2015

In the world of 'Crazy Jumping' stats, Ireland is in the league of its own. Reach no further than out to the Irish Producer Prices. In annual terms, factory prices are up 9.5% in March 2015 y/y, almost double the 5.2% rise in the year to February 2015.

What is going on? Oh, currency valuations (prices are up in euros while exports markets are priced in all sorts of stuff) plus MNCs that can freely adjust prices they charge to Irish operations. Thus, "In the year there was an increase of 11.9% in the price index for export sales …and a decrease of 3.3% in respect of the price index for home sales." Basic pharmaceuticals prices (largest contributor to y/y price change) are up 14.5% y/y, Printing and Reproduction of Recorded Media - aka ICT software etc - jumped up 19.5%, Computer, electronic and optical products (second largest contributor to y/y price change) prices up 19%.

And in m/m terms, "the most significant changes were increases in Computer, electronic and optical products (+5.2%), Basic pharmaceutical products and pharmaceutical preparations (+4.6%) and Other food products including bread and confectionery (+2.9%), while there were decreases in Dairy products (-1.0%) and Other Manufacturing including Medical and Dental Instruments and Supplies (-0.2%)."

Now, resurgent Building and Construction industry. Based on factory gate prices things are not exactly surging yet. "All materials prices [for Building and Construction industry] increased by 1.4% in the year since March 2014. The most notable yearly changes were increases in Stone (+14.7%), Hardwood (+12.3%) and Glass (+6.4%), while there were decreases in Other Structural steel (-4.0%), Concrete blocks and bricks (-3.3%) and Ready mixed mortar and concrete (-2.6%)."

So things are booming up in MNCs - predominantly on foot of accounting… err… forex valuations side. And they are slogging up in Building & Construction, and in capital goods side (prices up 1.2% y/y). Domestic economy producers, overall, are deflating, still. 

Meanwhile, "The price of Energy products decreased by 11.3% in the year since March 2014, while Petroleum fuels decreased by 10.7%." Did you notice any of these decreases in your electricity and gas bills? No, me neither.

But all looks rather pretty hyperbolic in growth terms when one uses 'one-closed-eye-on-reality' trick: