Evgeny Goryunov, Head of the Monetary Policy Department at the Gaidar Institute, in a commentary for Nezavisimaya Gazeta, explained why rising motor fuel prices have a greater impact on inflation than it might seem at first glance, and what will determine future price trends.
According to the economist, the direct contribution of rising fuel prices to inflation can be calculated fairly accurately, since gasoline and diesel are included in the consumer basket. However, it is much more difficult to assess the indirect effects—the rise in transportation costs and the cost of goods and services—which gradually feed through to prices across many sectors of the economy.
“If we consider only the direct effect, the contribution of rising petroleum product prices to inflation in the first half of the year can be estimated at approximately 0.6–0.8 percentage points. However, the final result for the year will depend on the situation with motor fuel supplies. If supplies recover, price growth may slow, and fuel’s contribution to inflation will be lower. It is still too early to speak about this with certainty,” emphasized Evgeny Goryunov.
The expert added that it is always difficult to predict the impact of fuel prices on inflation, since, in addition to direct effects, there are also indirect factors related to logistics, transportation costs, and possible disruptions in fuel supplies.