For the first time in five years: why the annual inflation in Russia exceeded 8%

Annual inflation in Russia has accelerated to its highest level in more than five years.

Such data on Wednesday, November 3, were presented by the Ministry of Economic Development and Rosstat.

According to the departments, in October 2021, consumer prices for goods and services in the country increased by an average of 8.13% compared to the same period in 2020.

The achieved level of annual inflation was the highest since February 2016.

Over the past 12 months, food prices in Russia have risen by 10.9%.

The largest increase in the cost of cabbage (almost 90%), potatoes (76%),

cucumbers and tomatoes (by 65%).

In addition, prices for carrots (39%) and chicken meat (31%) increased significantly.

Non-food products rose in price by an average of 8.2%.

The most noticeable increase in the price tags of cars (by 14-16%).

At the same time, the cost of medicines and gasoline increased only by 5.7 and 7.1%, respectively.

Note that the October annual inflation rate more than doubled the target level of the Bank of Russia (4%).

The observed increase in consumer prices is caused by an imbalance in supply and demand in the market, according to the Central Bank.

Thus, the level of consumption in the country continues to grow, and enterprises do not have time to adequately increase the output of goods.

In addition, prices are influenced by high inflationary expectations of Russians and enterprises.

This is stated in the report of the Central Bank on monetary policy.

“After the decline in August and September, inflationary expectations of the population and business are growing again and returned to the highs of recent years.

This, in turn, is fueling the rise in prices for a wide range of goods and services, ”the authors of the study note.

As Olga Belenkaya, head of the macroeconomic analysis department of FG Finam, explained in an interview with RT, the growth of inflationary expectations suggests that people are afraid of further price increases and begin to make large purchases earlier than originally planned.

Such actions increase consumer demand, as a result of which products become more expensive faster.

“Global problems with the supply of components also remain factors of inflation.

This is most clearly reflected in the car market, where there is now a deficit.

Moreover, against the backdrop of the global energy crisis, energy resources are becoming more expensive.

This leads to an increase in the costs of producers and an increase in the cost of finished imported products, components and fertilizers, "added Belenkaya.

As a reminder, in October world oil and gas prices reached record levels.

Thus, during the month, oil quotations of the Brent benchmark rose for the first time in three years above $ 86 per barrel.

At the same time, the cost of gas in Europe was approaching $ 2,000 per 1,000 cubic meters - the highest level ever recorded.

Product impulse

In addition to the rise in energy prices, experts note a sharp rise in the cost of food in the world, which also affects Russia.

Over the past year, world food prices have risen by almost a third, and in September they renewed their ten-year high.

This is evidenced by the latest estimates from the Food and Agriculture Organization of the United Nations (FAO).

“Often there are simply no alternatives to the more expensive imported products.

These include, for example, coffee, cocoa beans and tropical fruits.

Now the authorities are already considering the introduction on a permanent basis of near-zero duties on the import of cocoa products.

This decision would help to partially solve the problem and slow down the rise in prices at least for confectionery and chocolate, "Nikita Maslennikov, head of the Finance and Economics department at the Institute of Contemporary Development, told RT.

According to the Central Bank, the rise in food prices in Russia is also influenced by the relatively modest indicators of the harvest of vegetables.

As previously stated by the head of the Ministry of Agriculture Dmitry Patrushev, in 2021, weather factors "brought Russian farmers a lot of trials."

In the spring, sowing work began with a delay of several weeks, and during the season the Volga region, the Urals and the regions of the Central Chernozem region were under the influence of drought.

“Yakutia faced wildfires.

In a number of subjects of the Far East, agricultural production was carried out in conditions of floods.

In the south, heavy rainfall fell, damaging crops.

A natural emergency was declared in 16 regions, ”Patrushev explained at a government meeting on October 28.

• AGN "Moscow"

According to him, in order to solve the problem, the Ministry of Agriculture is improving the system of state support for agrarians.

In turn, Prime Minister Mikhail Mishustin instructed to develop additional mechanisms to help the industry.

“It is necessary to continue the preparation of a set of measures to support agricultural producers, including in order to contain the rise in food prices,” the head of the Cabinet stressed.

Finding balance

According to the Central Bank's forecast, by the end of 2021, the inflation rate in Russia may reach 7.4-7.9%, and in 2022 it should drop to 4-4.5%.

This should be facilitated by the monetary policy pursued by the regulator, according to the Central Bank.

Recall that since the beginning of 2021, as part of the fight against the rise in consumer prices, the Bank of Russia has already raised the key rate six times and brought it to the level of 7.5% per annum.

Moreover, as follows from the Central Bank's report, in 2022 the key rate will average 7.3-8.3%.

An increase in the key rate is one of the traditional economic instruments for slowing inflation.

Thus, the actions of the regulator lead to an increase in interest on deposits and all categories of loans.

As a result, the growth of consumer lending is slowing down, and the population is more actively directing money to deposits, which helps to curb demand.

“The Central Bank is now doing everything possible in terms of raising the key rate and tightening monetary conditions.

However, this is only one part of the equation that affects demand.

At the same time, it is necessary to ensure an increase in the supply of goods and services, and this is already the competence of the government, ”explained Nikita Maslennikov.

• © Konstantin Kokoshkin / Global Look Press

Note that the government is already taking the necessary measures to contain prices.

So, today in Russia there are special damper mechanisms in the markets of fuel, grain and sunflower oil.

In addition, in 2022, the authorities are going to increase support for vegetable growing by 5 billion rubles.

Producers will receive money from the state for the expansion and modernization of production, as well as the construction of storage facilities.

Small and medium-sized enterprises will be helped to ensure direct marketing of products.

Also, the Cabinet will allocate 10 billion rubles for the provision of subsidies to meat producers.

It is assumed that the money will allow enterprises to compensate for part of the cost of purchasing feed.

In addition, on November 3, the government announced plans to introduce temporary restrictions on the export of mineral fertilizers.

According to Mikhail Mishustin, the decision will help prevent a deficit in the domestic market and, as a result, avoid further increases in food prices.