Inflation Gained Momentum, Pushed Up by a Rapid Slowdown in the Seasonal Drop of Prices for Fruit and Vegetable Products

September saw an acceleration in Russian inflation: in September 2013, Consumer Price Index amounted to 0.2% (vs. 0.1% in August). However, it was 0.4 p.p. below its year-earlier level. 

As a result, annual inflation went up to 6.1 % (see Fig. 1). In September 2013, core inflation amounted to 0.7%, thus registering the same rate as in September 2012.  

Over the course of September, food prices remained constant at the same level as in August 2013. Prices for fruit and vegetable products continued to decline (from -11.3% in August to -7.6% in September). The growth rate of prices for lump and granulated sugar decreased from 4.4% in August to 1.1% in September, and that for fresh egg prices dropped from 7.4% in August to 6.5% in September. Compared with August 2013, the growth rates of prices for butter; milk and dairy products; and fish and seafood products increased from 2.6% to 2.9%; from 1.2% to 2.7%; and from 0.7% to 1.2%, respectively. In September, the growth rates of prices for bread, bakery products and alcoholic beverages amounted to 0.5%.  

In September 2013, the growth rate of tariffs and prices for paid services provided to the population amounted to 0.1%, somewhat below its August 2013 level (0.9%). The beginning of a new academic year brought on a considerable increase in the price of educational services (+3.8%). In September, the growth rate of tariffs for utilities services amounted to 0.3%.  The prices of services provided in the field of physical culture and sports; services provided by cultural institutions; personal services; and healthcare services went up by 1.8%, 1.2%, 0.5% and 0.4%, respectively.   

In September, the growth rate of prices for non-food products amounted to 0.5%, unchanged from August 2013. In that category of goods, the highest price increases were recorded for tobacco products (+3% vs. +2% in August), motor gasoline (+1.5% vs. +3.1% in August), footwear (+0.7% vs. 0.3% in August), clothes and underwear (+0.6% vs. +0.3% in August), pharmaceuticals (+0.5% vs. +0.5% in August), and radio and television goods (+0.4% vs. +0.3% in August).

In October, inflation gained momentum, pushed up by a rapid slowdown in the seasonal drop of prices for fruit and vegetable products coupled with a sharp increase in the growth rate of prices for fresh eggs. The Consumer Price Index for the first 23 days of October amounted to 0.4% (vs. 5.7%  for the corresponding period of 2012). It should be noted that the 0.2 pp leap in prices which took place during the third week of October can push the rate of inflation to slightly over 6% by the end of the year. At present, the main factors that are keeping inflation at bay are the lack of strong demand pressure on prices and this year’s relatively good harvest of major agricultural crops.

A.V.  Bozhechkova – Researcher