Inflation in Russia

The main articles are:

• Inflation
• Russian economy

2024

Inflation rises above 9% due to large government defense spending

The fall of the ruble in November 2024 increases the pressure on the Bank of Russia, forcing it to raise the key rate. The currency weakened by almost 8% against the dollar and yuan from November 21 to 28, after the United States imposed sanctions on about 50 Russian banks. This could increase inflation, which the Bank of Russia is trying to contain by raising interest rates to a record high. Price growth continues even at a record high key rate of 21%.

Previously, one-time factors that do not depend on the Central Bank of Russia contributed to an increase in price pressure, for example, unexpected frosts that destroyed the crop and contributed to an increase in food inflation to 12.3% in June 2024, compared with 8.3% in May.

Rising fuel costs have been boosted by seasonally high demand amid repairs to many refineries damaged by Ukrainian drones. The strengthening of the ruble, usually mitigating inflation by reducing the cost of imported goods, was undermined by new US sanctions, which led to an increase in payment costs for Russian importers.

"Difficulties with cross-border payments create pro-inflationary risks that outweigh the disinflationary effect of the ruble strengthening," the central bank said, pointing to import problems as one of the key reasons for the increase in price growth in a number of regions.

"Raising the key rate to 18% will not help much in the fight against inflation, but the central bank cannot do anything," says Natalya Zubarevich, a specialist in Russian regions from Moscow State University. "While budget funds will quickly pour into the economy, primarily into the defense sector, it will be extremely difficult to fight inflation, even raising the rate."

Investments in the military-industrial complex have a significant impact on inflation through various mechanisms.

• Labor outflow: Increased employment in the MIC leads to an outflow of workers from other sectors, creating a shortage of labor resources.

• Rising business costs: Other industries may be forced to raise wages to attract and retain workers, which increases production costs and can lead to higher prices for their products.

• Wage-price spiral: Rising wages boost workers "disposable income, boosting consumer demand. This can lead to an overall increase in prices for goods and services, increasing inflationary pressure.

Almost the entire budget impulse of the consolidated budget of Russia is concentrated in the military-industrial complex, which is expressed in inflationary pressure through the growth of salaries in the military-industrial complex and related sectors, and payments to participants in the military special operation in Ukraine.

The concentration of resources in the military-industrial complex (labor, capital, materials) can lead to their outflow from other sectors of the economy, potentially reducing the production of consumer goods and services, leading to an imbalance in supply and demand.

The recruitment of hundreds of thousands of people for the needs of the military-industrial complex and the concentration of labor in the military-industrial complex removes labor resources from the economy, having a destabilizing effect on the labor market, dispersing salaries - prices and so on along the chain.

The combination of high demand (due to an increase in the income of military-industrial complex workers and participants in the military-industrial complex) and a reduction in the supply of consumer goods increases inflationary pressure. Payments to the poor are often spent quickly on consumer goods and services, which can increase inflationary pressures.

This is one of the reasons for inflation in Russia in 2024.

Annual inflation in Russia in February 2024 rose to 7.7%, slightly exceeding market forecasts of 7.6%.

Earlier, the Ministry of Economic Development and Trade recorded annual inflation in the Russian Federation in January at 7.44%.

2023

Inflation growth to 7.4% at the end of the year

The annual inflation rate in Russia in December 2023 fell to 7.4% from 7.5% in the previous month, refuting market expectations of 7.6%.

The indicator also coincided with the forecast of the Central Bank, as consumer prices for services grew at a slower pace (8.3% versus 10.6%). On the other hand, the cost of food (8.2% versus 6.4% in November) and non-food products grew faster (6% versus 5.6%). On a monthly basis, consumer prices rose 0.7%, slowing down from a 1.1% gain in November.

3.3% in June

Inflation in Russia amounted to 3.3% YoY in June 2023 according to estimates by the Central Bank of the Russian Federation.

Slowdown to 2.31% in April

Annual inflation in the Russian Federation in April 2023 slowed down to 2.31% - Rosstat.

2022

Inflation for the year 11.9%

Inflation in Russia in 2022 was even lower than 12% - amounted to 11.9%, said the head of the Ministry of Economic Development Maxim Reshetnikov in January 2023.

Inflation in November - 12.6%

Inflation and inflation expectations for September 30

July inflation slowdown to 15.1%

Inflation in the Russian Federation in July 2022 slowed down in annual terms to 15.1% from 15.9% in June - Rosstat.

By the end of July, Rosstat has changed the methodology for calculating the consumer price index three times since the beginning of 2022. Each time he changed the composition of the consumer basket and excluded expensive goods for calculating inflation (trips to Turkey, which rose in price by 40%, removed bromhexine 42% and other goods).

July

Earlier, Rosstat recorded an unconventional deflation for June - 0.35%, annual inflation slowed down to 15.9% (17.1% in May).

Inflation growth to 17.8% - a record for 20 years and a gradual decline

In April 2022, Russian inflation jumped to its highest level since 2002, as international sanctions against the backdrop of a special operation by the Russian Armed Forces in Ukraine put pressure on prices and disrupted supply chains.

Price growth in April was 17.8% compared to a year earlier, the Federal Statistics Service said. That's just below analysts' forecast of 18%, according to a survey of 16 economists conducted. Bloomberg

Nevertheless, the Bank of Russia said that inflation, adjusted for seasonal factors, has already reached its peak. On a monthly basis, prices rose 1.6% in April, well below the 7.6% increase in the previous month.

Inflation in March - 16.7%

Annual inflation in Russia accelerated in March 2022 to 16.7%, the highest since March 2015.

Acceleration of inflation in February to 9.15%

Inflation in Russia in February 2022 accelerated to 1.17% from 0.99% in January, and in annual terms - to 9.15% from 8.73% a month earlier, follows from Rosstat data.

The last time inflation in annual terms above 9% was recorded in January 2016, when it reached 9.8%.

2021

Annual inflation 8.39% - maximum since 2015

In January 2022, Rosstat confirmed the estimate of inflation in the Russian Federation for 2021 at 8.39% - the maximum since 2015.

Inflation growth to 7%

Rise in industrial inflation to 35%

The spiral of inflation continues to unwind in the Russian economy, despite the tightening of the Central Bank's policy and the government's attempts to freeze prices.

Inflation rates in industry are above 30% and have been breaking records since the beginning of the 21st century. At the end of June, the producer price index increased by 31.1% year-on-year - so much increased the cost of products when shipped from factories and factories. A month earlier, industrial inflation reached 35.3%.

Rosstat recorded comparable rates only in 2004 (+ 28.8%), and levels are higher only after the 1998 default: 70.7% in 1999 and 31.9% in 2000.

In June, product manufacturers raised prices by 16.4% year-on-year, chemical plants by 40.1%, metallurgists by 34.6%, and refineries by 86%.

Inflation in May exceeded 6%

Inflation exceeds deposit rates

Main item: Deposits of individuals in Russia

Inflation growth at the beginning of the year to above 5%

2020: Rosstat: Inflation amounted to 4.91%

Inflation in Russia in 2020 amounted to 4.91% against 3.04% a year earlier. This is evidenced by the final data of Rosstat, published on January 12, 2021.

According to the department's calculations, after the lifting of "coronavirus" restrictions in the country, annual inflation "accelerated" in July to 3.4%, and in October jumped to 3.99%. At the same time, in November inflation amounted to 4.42%.

According to the Deputy Minister of Economic Development of Russia Polina Kryuchkova, the main contribution to the acceleration of inflation in 2020 was made by the weakening of the exchange rate - according to estimates, about 1.5 pp. (out of 2.5 pp. Increase in annual inflation in December compared to January). At the same time, taking into account the stabilization of the situation in the foreign exchange market, the effect of the exchange rate transfer is likely to be exhausted in the first quarter of 2021, she said.

According to the deputy minister, additional pressure on the growth rate of consumer prices in 2020 was exerted by the situation in the markets of agricultural products - both Russian and world.

The increase in exchange prices for key food products, as well as a decrease in the yield of individual crops compared to record levels in 2019, led to an acceleration in the growth of domestic consumer prices for food products (6.7% at the end of 2020), including socially significant food products, Kryuchkova said.

According to Interfax, inflation in 2020 has become the maximum since 2016 (when it was 5.4%), in 2017 the price increase was the lowest in history 2.5%, in 2018 - 4.3%, in 2019 - 3%.

Rosstat calculated that the consumer price index for food products in the Russian Federation in 2020 increased by 6.69%, for non-food products - by 4.79%. Prices for services increased by 2.7%, gasoline rose by 2.5%.^[1]

2019: 3%

According to the Central Bank, inflation in Russia in 2019 amounted to 3%.

2015

2013: 6,5%

Inflation in 2013, according to preliminary estimates of Rosstat, amounted to 6.5 percent. This was reported on December 31 on the website of the department. The data were obtained on the basis of price analysis for 64 types of basic goods and services in 271 Russian cities.

Notes