Antonina Levashenko: “The increase in housing and utility tariffs will give a one-time increase in inflation but will not have a significant impact on the monetary policy”

"Indexation of housing and utility tariffs is a planned annual procedure, as a rule, its increase is determined by two factors: revaluation of inflation and the impact of gas prices.

The growth of housing and utility tariffs is an important factor for the implementation of measures to modernize the infrastructure of the housing and utility sector. In particular, under the federal project it is planned to allocate Rb4.5 trillion for the modernization of utility infrastructure at the expense of budgetary and non-budgetary sources until 2030. For example, in some regions with larger modernization projects, the tariff index is set higher. The reasons for this are the growth of modernization costs and the cost of production of public utilities, which is associated with the wear and tear of networks.

Accordingly, taking into account these factors, in the current environment we should also expect a one-time increase in inflation. For example, last year on July 1, utility tariffs were also indexed, which raised inflation by 0.5% during the day and by 0.06% during the week.

However, this should not be expected to have a big impact on Russia’s overall monetary policy.

In general, the understanding that tariff price growth should grow based on the inflation rate is not a completely correct statement and leads to excessive inflationary expectations. As a result, the absence of such measures may lead to further degradation of utility infrastructure, further increase in the costs of housing and utilities," the expert said.