Higher Excise Duties on Alcohol Pushed the Inflation Rate Upwards

In January 2013, the inflation rate kept growing: on the basis of the results of the three weeks of the month the consumer price index amounted to 0.6%, having exceeded the January 2012 index value (+0.5%).

The main factors behind growth in prices were higher excise duties on alcohol products and higher prices on transportation services and horticultural products: in the period under review prices on vodka rose by 14.4%, ticket prices on tram and bus services, by 6% and 5.6%, respectively, while fruit and vegetable prices, by 6% to 10%.

As in 2012, the official 2013 inflation forecast of the RF Ministry of Economic Development amounts to 5% to 6%. In the beginning of the year, the inflation rate will go up due to growth in excise duties on excisable goods and seasonal prices rises on food.

In the second quarter, a slowdown of the consumer price inflation can be expected in a situation of weakening of economic growth, slowdown of the underlying inflation rate, as well as  moderate growth in money supply (as of December 1 the M2 money supply growth rates amounted to 14.4% against  20% in  2011).

However, a decrease in the inflation growth rates will be short-lived and in summer with raising of the regulated tariffs of state monopolies they will go up again.   

Also, it is worth mentioning the harvest – a factor which is difficult to forecast, but its effect on consumer prices is a significant one – on which the ultimate inflation rate will depend if no external shocks take place.  Thus, it will become clear only in the second half of the year whether the inflation rate does not go beyond the target limits.  

N.V. Luksha, PhD (Economics), Researcher of the Monetary policy Department