Bees suspect something – Newspaper Kommersant No. 219 (7420) dated 11/25/2022

The bulletins of the Bank of Russia published on Thursday show a not too standard picture of the change in price expectations in November 2022. Most of the population assumes a reduction in both current and future inflation – this is a general trend. In turn, a group of citizens with savings, as well as industry, are waiting for increased inflationary pressure and a possible increase in inflation at least in early 2023.

The divergence of expectations of more and less professionally assessing inflation groups became more pronounced in November 2022. This follows from the bulletins of the Bank of Russia published on Thursday. “Inflation expectations and consumer sentiment” and “Monitoring of enterprises” — the latter contains a separate block, which, regardless of the inflation surveys, describes the dynamics of the expectations of the management of large enterprises. In itself, the divergence of expectations based on the experience of past periods is temporary, the general trend is usually more stable than the private ones – nevertheless, the situation with inflation estimates and forecasts in the “professional” and “non-professional” environments is important this time, since no significant there were no external events that are usually reflected in expectations (a sharp change in the exchange rate, the key rate, major political events, changes in published inflation parameters, significant general economic regulatory decisions).

The median estimates of observed inflation in November 2022 for the entire sample of individuals are 17.6% per annum: this is lower than October’s 18.2% and, in principle, is fully consistent with the dynamics of “Rosstat” inflation.

At the same time, after a sharp decline in October, estimates of current inflation by a group of citizens with savings increased relatively strongly from 14.6% per annum to 15.3%, while the main group (at least 60% of respondents), who do not have savings, lowered their estimates from 20.5% per annum in October to 19.5% in November (this is still higher than estimates a year ago – 17.5% in November 2021, 16.2% on average for 2021). The discrepancy in inflation forecasts in the same groups is stronger – estimates of future inflation (in a year) for the group without savings decreased from 14.8% in October to the current 13.4%, while in the group with savings it, although symbolically, increased – from September-October 10.4% per annum to the November forecast of this group of 10.5% per annum consumer inflation over the next 12 months.

It should be noted that the group with savings as a whole tends to estimate both current and future inflation lower than their fellow citizens without savings – presumably, this is the effect of a smaller volume of consumer deprivations in this category of citizens, who are not always better off than the main group, but on average have a smaller share of food expenditures and are significantly more well off among them.

In general, expectations of future inflation across the entire sample dropped significantly – from 12.8% in October to 12.2% in November (these figures now coincided with the current Rosstat inflation, which, obviously, should be interpreted as a pure coincidence, which itself means nothing to itself.)

It is rational to assume that the growth of inflationary concern of citizens with savings is not the result of a greater increase in the cost of the consumer basket for more affluent strata (in practice, such dynamics in the consumer price index is not observed, although theoretically, an increase in the prices of imported goods, obviously, to a greater extent consumed in the group with savings , could play a role), but rather the previous increase in OFZ yields, a very significant instrument for savings: Kommersant previously noted the October surge in imputed inflation in OFZ yields, in the November Bulletin of the Central Bank, the estimates did not change much, although they had already slightly decreased on a number of government debt issues .

Another speculative component of rising estimates of both future and current inflation for the savings group is the end of the decline in deposit rates: with an overall decline in inflation, small investors can trust this information to a greater extent than Rosstat figures. Finally, one cannot exclude the impact on a group of public discussions in October-November 2022, more “professional” in terms of managing personal savings, about the possibility of a slight short-term increase in inflation due to growing instability in the global financial markets and a number of effects in the domestic economic situation (depletion of stocks of non-consumer imports and the rise in prices initiated by this for the remaining stocks, which are critical in production).

The last argument can also be applied to explain the dynamics of enterprises’ price expectations. In the Bulletin “Monitoring of enterprises”, which is quite optimistic on the whole, analysts of the Central Bank state “acceleration of the growth of selling prices after six months of its slowdown.” This estimate contradicts the Rosstat data published the day before on the recorded industrial deflation for the first time in several months (see “Kommersant” dated November 23). At the same time, in the Central Bank’s survey on the expected price change for the next three months, for the first time after many months of falling estimates that followed the “explosion of prices and price expectations” in March 2022, they suggest an acceleration in industrial prices.

It should be noted that the social management of enterprises surveyed by the Bank of Russia is part of the “with savings” group.

In any case, the coincidence of private and professional opinions about future inflation is hardly accidental, since at least these groups are much better acquainted with the concept of the balance of supply and demand than the bulk of the population of the Russian Federation.

Dmitry Butrin