In April 2021, the growth of selling prices in industry accelerated to 27.6% yoy, which is only partially explained by the effect of the low base of 2020. The historically high pressure of purchase prices and heightened inflationary expectations in the sector are also evidenced by market surveys; the monthly dynamics of the indicator remains significantly higher than expected. The growth of catalog prices for metals has already forced the Chamber of Commerce and Industry, on behalf of enterprises in the regions, to ask Denis Manturov to stabilize prices for rolled products under the threat of disruption of the state order.
The growth rates of wholesale prices in industry on an annualized basis accelerated to 27.6% in April against 16% in March 2021 (an increase in prices at a rate of 10-100% per annum is considered to be galloping): in oil and gas production, prices increased by 216%, ore – by 57.5%, in the production of coke and petroleum products – by 73.4%, chemistry – by 29.3%, in metallurgy – by 18.8%. This acceleration is only partly due to the low base of April 2020, when the indicator was down 7.2% due to the fall in oil prices. So, compared to December 2020, industrial prices in April increased by 13.8%, and decreased by 8% a year ago. At the same time, the consensus forecast Interfax at the end of April 2021, it was assumed that wholesale prices in April would increase by 0.9% compared to March, but, according to Rosstat, it amounted to 2.7% versus 3.6% growth in March, and in processing, the most expensive chemical products (by 7.5%), coke and oil products (4.9%) and metallurgy products (2%).
Industrialists also spoke about historically high price pressure in the April market surveys by Markit and the Gaidar Institute against the backdrop of continued growth in inflationary expectations in the sector (see “Kommersant” from May 6). “In April, inflationary expectations of the Russian industry continued to grow, adding another 4 points to the March result, which repeated the records of 2010 and 2015. The next “peak” that can submit to the pricing policy of the Russian industry is the pre-crisis July 2008, until which 5 points remain modest at present, “said Sergei Tsukhlo from the Gaidar Institute. According to the Central Bank, price expectations for the next quarter in the industry in April were the highest since the end of 2018 (excluding the local peak in December 2020).
Against this background, the head of the Chamber of Commerce and Industry Sergei Katyrin sent a letter to the head of the Ministry of Industry and Trade Denis Manturov on behalf of “numerous entrepreneurs from the regions” who count on measures to stabilize prices for rolled metal – they estimate the price increase for it at 50-80% over the past six months.
Particular difficulties, Mr. Katyrin notes, arise when fulfilling obligations under previously concluded state and municipal contracts, which “significantly increases the risks of non-fulfillment of government orders.”
Industrial prices in the Russian Federation are much more mobile than retail prices, and the question of the extent to which an increase in the industrial price index can be translated into an increase in prices in actual transactions remains open: the dynamics of monetary aggregates in recent months does not give grounds for firm confidence that rapid growth figures in industry price tags can be paid. Restricting demand in this case can quickly materialize during a pause in industrial growth – but this scenario is opposed by record low indicators of stocks in industry in January-March 2021: the industry can receive a part of the demanded.