Inflation is Being Kept at Bay by the Lack of Significant Demand Pressure on Prices

Price Index, as seen by the month’s results, amounted to 0.6% (against 0.2% in September 2013), thus climbing 0.1 p.p. above its year-earlier level. Thus, the inflation rate in per-annum terms went up to 6%. The core inflation rate in October 2013 was 0.6%, which is equal to its index for the same period of last year.

In October, the prices of foodstuffs rose by 1.1% on September 2013. Compared with September 2013, the growth rates of prices for bread and bakery products; fish and seafood products; and milk and dairy products declined from 0.5% to 0.3%; from 1.2% to 0.8%; and from 2.7% to 2.1%, respectively. Prices for meat and poultry did not grow (in September they had gone up by 0.3%). Prices for cereals and legumes as well as the price of granulated sugar dropped by 0.2% and 2.6%, respectively, while in September they had grown by 0.6% and 1.1%, respectively. On the whole, the rise in food prices was caused by a considerable increase in the growth rates of prices for fruit and vegetable products (from -7.6% in September to 3.3% in October) and fresh eggs (from 6.5% in September to 18.2% in October).

In October, the prices and tariffs established for commercial services declined by 0.1%, after having gone up 0.1% in September. The growth rate of tariffs for utilities services amounted to 0.5%.  The prices of services provided in the field of physical culture and sports, personal services, and healthcare services went up by 0.8%, 0.5%, 0.4% and 0.4%, respectively. The prices of passenger transport services and outbound tourism services dropped by 2.6% and 1.5%, respectively. The growth rates of prices for general education services, pre-school education services and insurance services declined by 0.5%, 1.3% and 0.1%, respectively.

In October, the growth rate of prices for non-food commodities amounted to 0.5%, thus remaining unchanged from September 2013. In this commodity group, the steepest upward movement was demonstrated by pharmaceuticals (+1.0% vs. +0.5% in September), footwear (+0.9% vs. +0.7% in September), and detergents (+0.6% vs. +0.3% in September). The growth rate of prices for tobacco products dwindled from 3.0% in September to 1.9% in October, and that of prices for motor gasoline dropped from 1.4% in September to 0.4% in October.

In November, the rate of inflation continued to grow, mainly due to the discontinuation of the seasonal drop in prices for fruit and vegetable products. The Consumer Price Index for the first 18 days of November amounted to 0.3%, similar to the same period of 2012. At present, the main factors that are keeping inflation at bay are the lack of significant demand pressure on prices and this year’s relatively good harvest of major agricultural crops.

A.V. Bozhechkova – Researcher