In Russia recorded a deflation for the first time in 5 years

For the week 26 July to 1 August 2016 consumer prices for goods and services dropped by 0.1%, from the data of Rosstat. Until this week the “best” was considered the first week of June, the results of which were zero inflation. In the first seven months of 2016, inflation was 4% vs 9.8% a year earlier.

Bloomberg data suggests that the weekly deflation in Russia has for the first time since September 2011 – from 6 to 12 September, consumer prices fell 0.1%. Although the symbolic deflation of the experts of “Interfax” recorded in mid-August 2015. Then for a week it was 0.01%. At the end of the month decline in consumer prices last recorded by Rosstat in September 2011, then deflation of 0.04 percent.

At the end of July 2016 to return to Russia deflation helped the fall in prices of some food products and, primarily, fruits and vegetables. On average, fruits and vegetables fell for the week by 3%, fresh tomatoes – by 8.5%, cucumbers – by 7.4%, cabbage – by 4.4%, potatoes – by 3.9%, potatoes – by 3.2%. In addition, lamb, sausages, wieners, fish, flour and wheat for a week became cheaper by 0.1%

At the same time in the Russian stores continued to grow buckwheat (+0.6%) and sugar (+1%).

Gasoline at the Russian stations during the last week of July rose by an average of 0.1%, and diesel fuel fell by 0.1%.

Earlier, representatives of the Ministry of economic development and the Ministry of Finance predicted the return of seasonal deflation in August 2016. In the summer of 2015 with a similar forecast was made by the Minister of economic development Alexei Ulyukayev, but then it was limited food deflation – prices fell only on fruits and vegetables and other foods, but the total decline never happened. Moreover, during July—September 2015 prices have increased by about 1.72%.

In the spring of 2016, analysts at Bank of America warned that in the long run, Russia may face the risk of deflation in connection with sharp reduction of budget expenditures in the face of declining levels of public debt, high interest rates and a surplus in current account.

Later, the head of the Central Bank Elvira Nabiullina said that the deflationary threat in the Russian economy in the coming years, “unreal”. At the same time, she acknowledged that the emergence of deflationary risks might a few years later, if the ruble strengthened greatly or slow down the growth of the economy.