Evgeny Goryunov, Head of Monetary Policy Department at the Gaidar Institute, explained in a commentary to Nezavisimaya Gazeta the reasons for the observed reduction in prices and why the current deflation cannot be yet considered as a stable economic trend.
According to the expert, the price decline is primarily seasonal, but the gradual fading of the VAT increase's effects also plays a role. Previously, companies factored increased tax costs into the price of goods and services, which accelerated inflation. This is now changing amid weakening demand and a slowing economy.
"Initially, sellers passed on increased tax costs to prices, and inflation was higher. Now, the impact of weakening aggregate demand is becoming apparent, i.e. the economy is slowing, therefore, inflation is declining and may even locally dip into negative territory," noted Evgeniy Goryunov.
However, the economist emphasized that it is premature to consider the emergence of sustained deflation. He stated that, given tight monetary policy, the likelihood of a long-term price decline remains low, and current fluctuations likely reflect temporary economic processes.