General inflation in the country keeps its non-monetary nature

Inflation remained stable in March: consumer price quantum index stood at 0.3% after 18 days in the month. In February, inflation decreased notably after a jump in consumer prices in January: consumer price quantum index declined from 1 до 0.6% at the end of the month.

However, it exceeded the figure of 2012 (+0.4%). As a result, annual inflation accelerated by 0.2 p.p. to 7.3%. Like in the preceding year core inflation1 stood at 0.4% in February 2013 (against +0.5% in January 2013).   

Data source: Rosstat of Russia.
Fig. 1. Consumer price index growth rate in 2011–2013 (% per year)

Growth rate in consumer prices slowed down basically in response to food disinflation by2.3 times (+0.8%) as a result of, on the one hand, reduction in growth rate of prices of fruits and vegetables (from 7.4 to 2.8%) and alcoholic products (from 4.9 to 2%), and, on the other hand, the list of lower price products was complemented with red meat, poultry, sugar (-0.3%), and eggs (-0.6%).  

Growth rate of prices and tariffs of paid public services in February resumed its December level (+0.4%) after an increase 0.2 p.p. in January. However, it should be noted that в February 2012 tariffs of paid services saw no growth. Passenger transport services, which raised 0.8%, were leading in price rise like in the preceding month:  tariffs of long-distance train sleeping cars as well as municipal public transport tariffs increased substantially. Central heating prices went down in response to unexpectedly warm weather in February.

Stable core inflation shows that headline inflation in the country keeps its non-monetary nature. It is driven basically by growth in food prices due to the low base effect and seasonal factor, raised excises on excisable goods and tariffs of transport services at the beginning of the year. Inflation was also accelerated in response to quantum indexation of pensions in February. Headline inflation is expected to fall not until the third quarter, depending largely on the situation with crop yield. Inflation will be constrained by lower domestic demand and further money supply shrinking (M2 growth rate is expected to slow down at an annual rate from 22.3% as of February 1, 2012 to 13.2% as of February 1, 2013).

Luksha N.V. – researcher,  Monetary Policy Department

 1 Basic consumer price quantum index – an indicator which reflects inflation level in the consumer market, net of seasonal (prices of fruits and vegetables) and administrative (tariffs on regulated types of services, etc.) factors, which is also calculated by the Rosstat of Russia.