Why the dynamics of consumer prices do not fit in with government forecasts
Inflation in Russia continues to exist contrary to the forecasts of the monetary authorities, moving further and further away from the target of 4% set by the Central Bank. In April, it increased again — by 0.5% compared to the March figure, reaching 7.84% in annual terms. And it is completely unclear on what basis the state stubbornly expects a sharp — one and a half times — reduction in this indicator in the coming months.
Let us remind you that according to updated estimates of the Ministry of Economic Development and the Central Bank, inflation in 2024 will be 5.1% and 4.8%, respectively. As the head of the regulator, Elvira Nabiullina, said at the beginning of April, the peak of inflation has already been passed thanks to the strict monetary policy (MCP) of the Bank of Russia. But the latest data from Rosstat do not confirm this conclusion, but they are consistent with another statement by Nabiullina — that “inflationary pressure remains high due to strong growth in domestic demand.”
According to Rosstat, inflation drivers in April were some vegetables, including beets (+21.9%), carrots (+7.4%), and apples (+3.3%). Among other food products, lamb (+4.6%), olive oil (+2.4%), and granulated sugar (+2.2%) went up in price. Prices for subscription fees for a package of cellular communication services increased by 8.5%. Prices for river cruises in Russia increased by 6%, and vacations on the Black Sea coast of the country increased by 2.7%. But there is also good news. So, last month prices for cucumbers and onions decreased — by 13.1% and 3%, respectively. But what to translate next: the rise in price of some goods or the reduction in price of others?
“Based on the results of May, we cannot expect a slowdown in inflation rates,” says the head of the sales and customer support department at Alfa-Forex. Alexander Shneiderman. “People always spend more on holidays: they eat out, travel, buy all kinds of services.” The expert draws attention to the fact that now the consumer price index in annual terms is two times lower than the key rate. Business hopes that the Central Bank will reduce it, but this will not happen in the near future. Due to the fact that prices do not want to go down, a tightening of the monetary policy rather suggests itself: that is, the rate will be increased to 17%, which is already being discussed at the highest level.
As for the dynamics for different categories of goods, food inflation is likely to slow down due to the seasonality factor: in the summer, most fruits, berries and vegetables always become cheaper. At the same time, the cost of electronics and household appliances risks rising even more due to problems with imports – especially components from China. Thus, Shneiderman notes, achieving the goal of 4.3-4.8% by the end of 2024, which the Central Bank stubbornly insists on, looks like an increasingly fantastic task. Yes, perhaps the inflation peak has passed, but the current efforts of the regulator are clearly not enough to achieve the target values.
“Inflationary pressure may be eased by the cancellation of the preferential mortgage program at 8% from July 1,” says Valery Tumin, a member of the Expert Council for the Development of the Digital Economy under the State Duma Committee on Economic Policy. — But there are other factors that are now driving up prices: a shortage of personnel, high dynamics in the issuance of consumer loans, tightening foreign trade conditions. Accordingly, we must try to improve the situation on the labor market — find and attract the right workers, create jobs. In a stable economy, low inflation is only achievable if there are enough qualified people doing their jobs. In addition, it is necessary to soften the trade balance: currently exports are declining with high imports, and if this trend can be reversed, inflation will slow down. But so far there are no prerequisites for this.”
“Inflation forecasts from Russian departments look rather like verbal interventions, like attempts to influence inflation expectations,” says Igor Nikolaev, chief researcher at the Institute of Economics of the Russian Academy of Sciences. — We must not forget: from July 1, we will see an indexation of utility tariffs by an average of 9.8%, and in some cases regions — by 11-12%. In addition, according to the scenario of the Ministry of Economic Development, the average annual exchange rate of the ruble this year will be 94.7 per dollar. In December, when the Central Bank set the rate at 16%, inflation was 7.4%, now — 7.84%.» With such initial data, according to MK’s interlocutor, it is impossible to quickly bring the inflation rate to 4-5%.