Inflation in Russia has renewed its five-year highs. In June, the annual growth in consumer prices accelerated to 6.5% – this has not happened since August 2016. According to the latest data from Rosstat, compared to June 2020, sugar, sunflower oil and chicken eggs rose in price the most. Of non-food products, building materials have grown significantly in price.
Details – in the help “Kommersant FM”:
Since June 2020, sugar has increased in price by almost 44%, sunflower oil – 27.5%, and chicken eggs – 21%. In addition, prices for meat and poultry, frozen fish and fruits and vegetables rose by more than 10%. Among non-food products, the most significant growth was observed in building materials – almost 24%. Tobacco added 11%, while gasoline and medicines – 6% each. Prices in Russian hotels have increased by 20%, and a trip to rest in Turkey has risen in price by almost 40% in June alone.
During the “Direct Line” on June 30, Russian President Vladimir Putin, in response to a question why carrots are more expensive in the country than Ecuadorian bananas, said that we “did not have enough of our products” and hoped that the situation would improve with the appearance of a new crop. What is the acceleration of inflation actually connected with? And what will happen to her next? Yevgeny Nadorshin, chief economist of the consulting company PF-Capital, answered these questions to Kommersant FM: “By the standards of recent years, this is a very impressive figure. How much it correlates with the actual values is harder to say. There is the problem of the average, which is well explained by the “average temperature in the hospital”. Everyone’s inflation will be slightly different from him. If we calculated the average not for the Rosstat basket, but for the actual consumption of the population, we would find the figure higher. I don’t think it’s radical, one, maximum two percentage points. And in two I am not sure anymore.
Regarding why we did worse with carrots than with bananas, the president answered rather exhaustively. We were partly held hostage to our own poor harvest and, what Vladimir Putin forgot to add, counter-sanctions. A certain number of trade relations with our closest neighbors have been disrupted. This is one of the reasons for the rather high food inflation we are facing.
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How long will this last? So far, everything is not very good with the harvest. June turned out to be rather cold, and in June food positions again became the leader in inflation. There is good news: Rosstat published data for July, and already, in principle, at the end of June this was evident in many positions, and July confirms this – fruits and vegetables are starting to fall in price, which is great. Maybe later than usual, but we will still get a fairly large-scale decline in prices for a decent amount of fruit and vegetable items.
What we have encountered is a phenomenon of an exclusively temporary nature. As regards the positions, it is clearly seen, for example, that the rise in prices for food products has exhausted itself.
Tourism, building materials – demand is high. We opened flights to other countries, the ruble fell in price. We see the influence of these processes in inflation, but they are also temporary. In July, August, we can even see deflation after such a rapid rise in prices. Of course, if we are lucky with the harvest, but the weather seems to be noticeably better. When the demand for the same building materials and a number of other items falls, we may see a good decline in the cost of goods and a much more modest growth rate in consumer prices by the end of 2021. I expect it to be noticeably below 6% even with the current rampage. “
Vladimir Putin drew attention to the rapid rise in food prices at the end of 2020. He criticized the government for its slow response. After that, officials reached an agreement between producers and sellers of sugar and sunflower oil to freeze the cost of these goods. Later, similar measures appeared in relation to chicken eggs. In addition, last spring, the authorities secured substantial discounts on metal products for government projects.
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However, according to Natalia Orlova, head of the center for macroeconomic analysis of Alfa-Bank, these efforts are not enough to curb inflation. Due to many internal and external factors, the rise in prices in Russia will increase in the fall, after the elections to the State Duma, continued Ms. Orlova: “The global inflationary background remains high. The rapid growth of the cost of container transportation in the world continues in recent weeks. Naturally, this will lead to imported inflation in the cost of those goods that Russia buys abroad. There are internal factors, they still include a small number of people who travel abroad, a rapid decline in the unemployment rate, a certain electoral cycle, and the likely financing of social spending, which, against the backdrop of all these already elevated inflationary factors, could accelerate inflation.
Our forecast of 6.3% at the end of 2021 assumes inflation of only 0.5% per month in the fourth quarter. This is a level below the current one. “
In February, the Central Bank assumed that inflation by the end of the current year would remain in the range of 3.5% – 4%. However, in June, the regulator abandoned this forecast. Now the Bank of Russia hopes that the consumer price index will return to the target indicator in the summer of 2022.