Carrots and potatoes have risen abnormally, dispersing inflation

Rosstat published data on inflation for the first half of the year. The numbers are inconsistent. On the one hand, price growth remains extremely modest – 3.25% in annual terms. On the other hand, inflation is accelerating more and more. Compared to May, it increased by 0.37%, and compared to December last year, by 2.76%. The interest may not be that significant, but the trend is frightening: inflation will continue to grow from month to month. This is indicated both by the forecasts of the official authorities and by the assessments of the experts we interviewed.

Some analysts note with deep satisfaction that in June inflation was even somewhat lower than expected – 3.25%. But by itself, this figure says little: after all, the countdown comes from the “high base” of last year, when inflation was around 15%.

And in general, the average figure means nothing … The prices of TVs and vacuum cleaners, which we buy every 25 years, or some other long-lasting goods have decreased, and inflation no longer seems to us so great and terrible. But what about everyday goods, products? Russians judge inflation not by statistical reports, but by real prices in the store.

In relation to May, food prices fell by 0.01% – quite a microscopic amount. For the most part, it was provided by fruit and vegetable products, which “threw off” almost 2.5% in a month. Although in the first half of the year (compared to December last year) it increased by 13.5%. And for other products, too, there is a reason to rejoice. In particular, some cereals, chicken eggs, sunflower oil and wheat flour fell in price by 1.3-2.4%.

At the same time, chicken meat (6.8%), granulated sugar by almost 5%, followed by canned meat, live and chilled fish, rice…

Great hopes for a decrease in inflation were pinned on the mass harvest of vegetables, which has already started in the south of Russia. Against this background, the prices for onions (13.5%), as expected, fell in price by almost 11%, prices for bananas, cucumbers and tomatoes fell by almost 11%.

This is where the reasons for joy end, and then the reasons for surprise and chagrin begin. Unexpectedly, the price of carrots went up by 22%, by 21.5% – by potatoes, by 13% – by beets. The price of lemons and apples has also risen noticeably. Why so? As for the prices for the “second bread”, everything is more or less clear. Farmers from the Rostov region told us that they ship tubers to Moscow from the field at 24 rubles per kilogram. And here in retail it is 40 rubles minimum. It is possible that the same story is with other vegetables.

What will happen to annual inflation in the future? Here the “testimonies” of experts diverge. For example, analysts of the Central Bank of the Russian Federation say that all opportunities are opening up for its growth and are confident that further prices will grow even stronger. The guarantee for this is the falling exchange rate of the ruble, which will still have its say. In addition, the magic effect of a year-old high inflation base ceases to operate – it reached its peak in April-May, and began to decline sharply in summer and autumn.

But there is another – optimistic – point of view. Some experts predict that the mass harvesting of vegetables, to which the regions of Central Russia are already joining, will slow down the annual inflation growth. After all, in years past, July and August were the most common months of deflation—falling prices.

If we put these and other arguments on the virtual scales, then in which direction will they swing? We asked the Chief Researcher of the Institute of Economics of the Russian Academy of Sciences, Doctor of Economics Igor Nikolaev:

– I believe that further inflation will begin to accelerate. There are factors that influence it.

– Which ones exactly?

– With a high degree of probability, the Central Bank will raise the key rate at the end of the month. This means that the trend has changed. More recently, inflation in annual terms was slightly above two percent, and now it is approaching 3.5%. Prices turned the other way. A fairly strong weakening of the ruble is affecting. But not only. Inflation is influenced by the general macroeconomic situation in the country, the highest uncertainty…

However, the shock scenario will not occur. There is a powerful deterrent – the dynamics of real disposable incomes of the population. She leaves a lot to be desired. According to the results of the first quarter, revenues grew by 0.1% – this is about nothing. And at the end of last year, they decreased by one percent. The decline in the purchasing power of citizens is holding back manufacturers and trade from actively raising prices.

– The government and the Central Bank name different inflation figures for the year – from 5 to 6.5%. What is your forecast?

– Inflation will fit into single digits (that is, below 10%), such chances remain. In my opinion, this year it will be about 8%.

– Some experts hope that the mass harvesting of vegetables and crops that has begun will noticeably slow down the growth of inflation. After all, this happened a year ago …

– One could really hope for this if the harvesting of vegetables did not take place in our country every year. This is a seasonal factor, in August-September inflation may slow down, but we are talking about annual terms. It is not worth counting on the seasonal factor precisely because it is seasonal.