Economist Maslennikov named three main risks for rising prices in Russia

The topic of inflation again, like a year ago, comes to the fore among the problems that concern Russians. At least, this is evidenced by recent opinion polls. At the same time, our authorities promise not just a slowdown in the growth of prices, but a drop in them at times. Well, people who make purchases, go to shops and markets, pay for utilities, looking at checks, price tags and bills, stubbornly do not believe in it.

The other day, Vladimir Putin said that inflation in 2022 “will be slightly above 12%.” As for the coming year, the President suggested that in the first quarter it will slow down to 4-5% in annual terms. At the same time, according to the forecast of the Ministry of Economic Development, inflation in 2023 may reach 5.5%. The Central Bank allows its level within 5-7%.

In any case, the authorities’ forecasts mean that inflation in the coming year will fall by at least half. Accordingly, prices will not be “inflated” in stores, and our income will not depreciate at the speed of a courier train.

As they say, blessed is he who believes. The Russians, who have already experienced more than one financial crisis in their post-Soviet century, do not share such optimism. And there are reasons for this. If we look a little ahead, we will see a lot of pro-inflationary risks that await us here and there.

Some economists put the volatility of the ruble in the forefront, which, against the backdrop of sanctions, is tired of keeping its style and has ceased to be “one of the most reliable currencies in the world.” In December, it falls: 62 rubles per dollar, 67, and now it has already exceeded 70. In general, in one month I lost 20% of my purchasing power. A weak ruble will certainly lead us to a rise in the price of goods in general and food in particular – we have already gone through this.

Here is a Russian laying hen that lays eggs for retail chains. In fact, it is not entirely Russian, as it hatched from an incubation egg supplied to us by import – from Germany or Holland.

Many products, even those successfully imported recently, still contain ingredients that we buy for dollars or euros. Not to mention the direct purchase of imports, which come to us, including through parallel channels.

Inflationary risks can also be attributed to the inopportune housing reform that began this year, which is funded by taxpayers. Since December 1, the fee for services – supplied resources – has been increased by 9%. Apparently, these added percentages will say their “weighty word” at the beginning of the year, when “letters of happiness” – payments for December will fall into the mailboxes.

The seasonal, winter-spring increase in the price of vegetables cannot be discounted. Now retail trade still holds prices for them. This is due to the fact that many producers who do not have modern storage facilities sell potatoes and carrots for next to nothing in order to somehow compensate for the costs of growing crops. However, already from the New Year, the products will go from storage – and at different prices. And then according to the well-established scheme: import deliveries – again, for hard currency.

In general, given the existing inflationary risks, which became acute at the end of this year, it is not particularly believable that annual inflation in Russia will fall by half next year. Well, what do the experts think about this?

According to the leading expert of the Center for Political Technologies, economist Nikita Maslennikov, the effect of the growth of the “communal” has almost been exhausted. If in the first week of December inflation jumped from 12.01 to 12.54%, in the second week it rose by another 0.13%, then in the third it dropped to the level of 12.35.

The ruble, in his opinion, will also maintain stability in the corridor of 68-71 per dollar, no obvious fluctuations in any direction are expected. Much will be decided by the prices of oil and gas, the reduction of oil production in Russia.

He sees three factors as the main inflationary risks.

– The main one is the level of our supply in the economy of goods and services, – the scientist believes. So far it leaves much to be desired. When supply and demand are out of balance, there is always the possibility of rising consumer prices.

The second point is the unobvious dynamics of imported goods, they often “make” prices in our domestic market, for the goods of our manufacturers.

The third major risk is the possibility of a global crisis. Will it be global or limited to recessions in some of the world’s major economies? There are more chances that a global crisis like 2008-2009 will not happen. But such a possibility cannot be ruled out, it will affect the exchange rate, prices, and the entire commodity chain.

– Do you agree with the inflation forecasts of our ministries in 2023?

– They are of a working nature, but generally fair. Although I would adjust the Central Bank’s expectations of 5-7% to 6-8%. In any case, this is a significant decrease to the current annual inflation.

We need to see how pro-inflationary risks and budget emission will be realized. The Ministry of Finance has increased budget expenditures for next year by 2 trillion rubles. When more money enters the economy, inflation rises. The question is what it will be and how long it will last.

At the beginning of the year there will be a paradox. Annual inflation will decrease, in the first quarter it will be in the range of 4-5%. And the current, weekly and monthly, will remain at a fairly high level. Based on these indicators, it will be possible to make a more or less reliable forecast for the next year. I suppose we will find out on February 10, when the first meeting of the Board of Directors of the Central Bank next year will take place.

In 2023, inflation will be significantly lower than today, but its pace will not allow the “investment engine” to be fully launched. To do this, it must be stable and below 5%. So far, we do not see a way to reduce it to such a level.