In Russia for the first time in five years, I stopped monthly price increase

At the end of August 2016 monthly inflation in Russia amounted to 0% from the previous month, according to Rosstat. Compared to August of last year prices were higher by 6.9 percent, starting in 2016, they increased by 3.9%.

Inflation, in particular, has slowed prices for fruits and vegetables (a seasonal decline of 8.9%) and on food excluding alcoholic beverages (-0,7%). At the same time increased prices for buckwheat (+2%), sugar (+1,9%), butter (+1.2 percent).

As for non-food items, on 0,2—0,6% became cheaper smartphones, TVs, computers, washing machines, bikes etc. the Growth was recorded in regard to school products: school bags and backpacks (3,5%), textbooks (2,8%), notebooks and albums (1,1—2,2%). In addition, prices for some drugs.

The last time monthly inflation in Russia amounted to exactly 0% in October 2009. Since then, rates on a monthly basis, has steadily increased, and only for three months from July to September 2011, Russia experienced deflation. Stop the growth of prices in August 2016, is made possible also thanks to deflation in the beginning of the month (in the period from 2 to 8 August, prices were down 0.1%). For the first time this year a week-long deflation was recorded from 26 July to 1 August (prices were also down 0.1%), and before that the phenomenon was observed only in September 2011.

The slowdown of inflation in Russia said President Vladimir Putin, speaking about the stabilization of the economy. “Compared to last year capital outflow has decreased in five times. Inflation reduced in two times. The budget deficit at 2.6%. We keep unemployment at a low level of 5.7 percent. External debt remains fairly low — only 12 percent,” he said yesterday during the G20 summit in China. However, the efforts of the Russian authorities to normalise the situation Putin praised as “insufficient, modest.”

According to the forecast of the Central Bank, rising prices at the end of 2016 will amount to 5-6% (the regulator has revised it in June, previous forecast was 6-7%). However, inflation risks, according to the Central Bank remain. They are associated with the inertia of inflation expectations, uncertainty about the fiscal consolidation and possible changes in consumer behaviour”, explained the Ministry. “The deterrent effect on the dynamics of consumer prices continues to benefit from the strengthening of the ruble since March, and low consumer demand”, — stressed in the Ministry. At the end of 2017, as expected, the Central Bank, inflation is expected to reach the target level of 0.4%.

In August 2016 in Russia decreased inflationary expectations of the population, reported the Central Bank on the basis of survey data “the old”. They amounted to 6.4% in the next 12 months (in July it was 6.9 percent). The share of respondents who expect slowing of price growth has increased to 18%, and those for whose opinion she will not change — decreased to 51%. However, as emphasized by the controller, this dynamic likely reflects a recovery from the deterioration estimates in July (it was associated with the indexation of utility tariffs).