Summer anomaly

Onions, gasoline and the influx of capital prevent the presidential order from being fulfilled

Inflation has begun to accelerate again. After 0.5% in May and 0.3% in June, consumer price growth in July amounted to 0.7%. These are the official data of Rosstat. The results of the month turned out to be higher than both the official forecasts of the Ministry of Economic Development and expert estimates. German Gref's department expected inflation at 0.5-0.6%, the consensus forecast prepared by the Interfax agency gave half a percent. Nevertheless, the Ministry of Economic Development does not yet intend to revise the annual forecast.

In June, the upper level of the inflation forecast for 2006 was already raised from 8.5 to 9%, and at this point, apparently, the political resource has been exhausted. The task of combating inflation was set by the president, but year after year the rise in prices turns out to be stronger than all government methods to tame them.

The July surge was unexpected. Traditionally, summer is a season of lower prices for fruits and vegetables, which, naturally, has a positive effect on the overall level of inflation. This year the opposite happened. According to Rosstat, inflation in July was significantly influenced by a significant increase in prices for fruits and vegetables (by 2.7%), including onions rising in price by 14%, potatoes by 10.7%. In addition, sugar prices jumped by 7.9% in July. In general, prices for food products in July increased by 0.9% (did not change in June), and excluding fruits and vegetables increased by 0.7% (June - 0.1%). Over the past month, non-food products became more expensive by 0.4% (in June - by 0.3%). Tariffs for services to the population increased by 0.6% (0.7%) mainly due to a significant seasonal increase in prices for sanatorium and health services (by 2.6%) and tariffs for passenger transport (by 1.3%).

The Ministry of Economic Development explains the increase in prices for other reasons. According to the head of the Department of Macroeconomic Forecasting of the Ministry of Economic Development and Trade, Andrei Klepach, the key reason for the July price collapse was the growth of household incomes. Given that the Russian population has been accustomed over the past decades not to save money, but to spend it immediately, any increase in income leads to additional inflation.

In addition, gasoline prices have gone up again. According to Rosstat, in July the rise in gasoline prices accelerated to 1.1% versus 0.3% in June. True, the Ministry of Economic Development and Trade expects to avoid further price increases. “For now, I would hold off agreeing with those who expect prices to rise to a level of more than 20 rubles. per liter, since there is no shortage of supply of petroleum products,” said Mr. Klepach.

Government officials now place their main hopes on August-September. Usually during this period the general price level remains unchanged or even decreases (that is, deflation occurs). However, many experts doubt that this will happen this year. For example, the increase in prices for alcoholic beverages due to confusion with excise stamps amounted to 0.9% in July, and so far one cannot expect it to slow down. In addition, it is still difficult to make forecasts on prices for agricultural products. Although the prospects for the harvest are good, the main problem, according to Mr. Klepach, remains the difference between the prices of agricultural producers and end consumers due to the large number of intermediaries.

Mr. Klepach himself cautiously says that in August-September they expect “stagnation, that is, little or no growth.” Commenting on the forecast for the year, he noted that the situation with prices will depend on the rate of increase in household incomes, the harvest, and imports of products. However, some experts tend to blame the government itself for inflation. As Evgeniy Gavrilenkov, chief economist at Troika Dialog, told Interfax: “The Central Bank dug a hole for itself when it talked about the strengthening of the ruble, weekly signaling investors to import capital from the country, which led to a significant increase in borrowing and, as a result, growth money supply from an annual growth rate of 37% at the beginning of the year to 43-44% in the middle of the year. Secondly, in the spring, budget expenditures lagged behind the spending schedule by about 25%, which somewhat suppressed inflation, and at the end of the six months, apparently, budget expenditures began to grow, and in July the money went to the market.”

Vera SITNINA