Weak consumer demand, the strong ruble and seasonal factors have led to a week of deflation in Russia for the first time in five years. Prices may fall and up to August, according to the Ministry of Economic Development
A rare phenomenon
Rosstat first time in five years recorded in the Russian weekly deflation: for seven days with July 26 to August 1, prices fell by 0.1%. Since the beginning of the year they rose by 4%. Over the past week fell ten foods, including fruits and vegetables, which on average became cheaper by 3%, follows from the materials of Rosstat. Most of the decrease in prices for fresh tomatoes and cucumbers – 8.5 and 7.4%, respectively. At 0.1% cheaper lamb, sausages, sausages, fish, flour and wheat
Deflation -. A rare phenomenon in Russia, where last year the rise in prices measured in double digits. The last time before this week, deflation was recorded in the second week of September 2011. On the other hand, the decline in prices in the last week of July was not such a surprise. It coincided with the Ministry’s expectations, said RBC Ministry spokesman, earlier “small” deflation in August, did not exclude the Deputy Finance Minister Maxim Oreshkin, and the head of the Central Bank Elvira Nabiullina allowed weekly price reductions “in early autumn or in late August».
Deflation last week was due to a significant reduction in price of fruit and vegetables, as well as slower growth in prices for non-food products and certain foodstuffs excluding fruit and vegetables, a spokesman for the Economic Development Ministry said. In the summer months, prices for fruits and vegetables traditionally decline, which affects the moderation of inflation, resembles the head of the Economic Expert Group Evsei Gurvich. But this summer celebrated a good harvest, and the factors that in 2014 and 2015 were run inflation, came to naught. In the summer of 2014, first affected the effect of the devaluation of the ruble, and then began to be reflected in the prices and food kontrsanktsii imposed in August 2014. This year, the last week of July affected more severe drop in prices for fruit and vegetables than a year ago, adds Gurvich.
A stable ruble
In the last week of July mixed dynamics on basic food items, but to accelerate the deflation in fruit and vegetables “outweighed” by providing a week-long deflation indicates ING chief economist for Russia and CIS Dmitry Polevoy. In addition, to stabilize the situation with the prices after the traditional summer increase in tariffs – this is reflected in the first three weeks of July
Among the factors that led to deflation for the first time in a long time, Field carries the expectation of a record grain harvest and relatively. stable dynamics of the ruble exchange rate in the last few weeks. Although the ruble ceased to be strengthened in July – after a “verbal intervention” of the officials, from the beginning, he still added about 10%
But the main deterrent to growth of prices is weak consumer demand, which can especially be felt in the segment. non-food products and non-regulated services. More details about this will say monthly data that Rosstat will publish this week, says Field. In the past two years a barrier to deflation have been the volatility of the ruble, higher inflation expectations and higher tariff increase, he explains.
As in 2011
“The probability of deflation in August there. More precise estimates can be given after the reporting of information on inflation in July “, – said the representative of the Ministry of Economic Development RBC. At the current dynamics of moderate deflation can be fixed in August, agree Field. “It is important that inflation returned to the level in May after the June burst, and this trend may continue. By the end of the year we can go down to a value of 6%, “- says he
If this occurs, the picture is similar to the data in 2011.. In that year, deflation was observed for three months – July, August and September. Then the general price index for goods and services decreased to negative values of 0.01, 0.24 and 0.04%, respectively, Rosstat data show.
at the end of 2016 inflation will be 6.5%, it slow due to weak consumer demand, according to a baseline forecast of Ministry of Economic Development. But in late June, Deputy Economy Minister Alexei Vedev said that inflation for the year is expected “at the level of 6%, maybe even slightly lower – 5.9%.” In June, the Central Bank also lowered its inflation forecast for this year – up to 5-6% (December 2016 to December 2015 th) compared to the March forecast of 6-7%. The Bank of Russia said “proinflyatsionnye certain risks associated with increased inflation expectations, the absence of a strategy of fiscal consolidation and uncertainty about the indexation of salaries and pensions.” July 29 the Central Bank, justifying the decision not to lower its key rate, pointed out that although overall inflation is slowing, “has ceased to decline, core inflation, as well as seasonally adjusted monthly rates of increase in consumer prices and inflation expectations»
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In the past year, inflation amounted to 12.9%, the highest figure since 2008.
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