© Bloomberg. The Kremlin clock sits on the Spasskaya tower, center, near St. Basil’s cathedral, left, on Red Square in Moscow, Russia, on Wednesday, July 5, 2017. U.S. officials, including Brett McGurk, the U.S. envoy for the coalition to fight the Islamic State, have been quietly meeting with Russian counterparts for weeks to lay the groundwork for cooperation.

(Bloomberg) — Wages in Russia unexpectedly grew in March and April as inflation began to retreat from a spike.

Wages adjusted for inflation rose 1.6% in April, the Federal Statistics Statistics service said Friday. A reading for March was also revised up to 2.3% from flat, skewing economist estimates. The median estimate in a Bloomberg survey had put April wage growth at 0.2%.

Retail sales rose 1.2%, after climbing 1.6% in March.

Key Insights

  • Inflation decelerated in April for the first time in nine months after the effects wore off from a value-added tax increase earlier in the year. Price growth is expected to fall further in May.
  • Growth came in weaker than expected in the first quarter but economists expect it to pick up in the second half of the year when the government begins spending on big investment projects. Growth was 1.6% in April, the Economy Ministry said Friday
  • Consumption remains one of the main growth drivers for Russia, though recently it has been supported by retail lending
  • Fixed-capital investment rose 0.5% in the first quarter from a year ago, following a jump in the fourth quarter of last year
  • READ: Output-Data Error Is Latest Setback for Russia Statistics Agency

What Bloomberg’s Economists Say…

“Slight disappointment in retail sales suggests the weakness in demand could linger. But the unexpected bump in wage growth is already laying the foundations for a rebound.”–Scott Johnson, Bloomberg Economics

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