Alexander Knobel: “Annual inflation in Russia sped up to 8.4% in November”

Commenting to the TASS News Agency the accelerating rate of inflation of 8.4% which approached the five-year record high in November, Alexander Knobel, Head of the International Trade Department, Gaidar Institute said that the increased rates of inflation were still one of the main pandemic-related implications caused by developed countries’ measures to underpin demand.

“Inflation has hit an all-time record even in developed countries (the US and the euro area) which used to have lower and predictable rates of consumer price increases. The situation in Russia correlates highly with the global trend. On the back of appreciation of all commodity prices (except steel) on global markets since the beginning of the year, domestic market prices have picked up, too, while moderate ruble strengthening in 2021 offset the forecast insignificantly the effect of global prices pass-through to domestic prices,” Alexander Knobel explained.

Alexander Knobel underlined the importance of the RF Central Bank’s measures aimed at controlling domestic prices and, consequently, the overall rates of price increases. “The raising of the key rate has a limited effect on the price dynamics of traded goods, while overall inflation decreases owing to the key rate’s effect on price increases for services and other (nontraded) goods. The growth rates of prices for imported and exported types of goods are likely to bounce back only after the inflation in advanced economies has normalized and global prices for main primary products and food have been adjusted,” Alexander Knobel noted.

“Comparison of global market prices with domestic market prices has shown that damper mechanisms utilized by government agencies have already made it feasible to “untie” prices for a number of goods from world market prices without affecting the investment appeal of relevant industries. Under current conditions, these instruments are particularly effective,” Alexander Knobel said.