The decline in industrial prices so far slows down consumer inflation

In July, compared to June 2022, producer prices of goods decreased by 2.2%, in annual terms, their growth rates decreased to 6.1% against 11.3% in June, Rosstat estimated. The deflation of selling prices in the industry is in line with the expectations of companies (see Kommersant of June 29) and has been observed for the third month in a row, and although its pace is slowing down, in July the decline in the indicator turned out to be much stronger than expected (the consensus of the Interfax agency was minus 0.7 % for July).

Among the extractive industries, in terms of month to month, price growth (1.1%) was observed only in the extraction of oil and gas, and among the manufacturing industries – only in the production of medicines (0.3%), machinery and equipment (0.6%) and drinks (0.1%). “The main deflationary factor for the overall index was metals and other minerals. Here, price pressure is easing globally due to fears of a recession and a slowdown in economic activity in China,” commented on Rosstat’s report on the selling prices of companies from the analysts of the telegram channel Solid Numbers. According to their estimates, in July, producer prices declined by 3.2% seasonally adjusted against a decline of 3.7% in June, which also confirms the slowdown in the decline in producer prices.

The decline in producer prices is taking place in parallel with the decline in consumer inflation (see graph), which, according to Rosstat’s operational estimates, fell below 15% in annual terms as of August 15 (see “Today’s Number”). The “proxy” for consumer inflation, the consumer goods producer price index, made by analysts from the telegram channel Hard Digits, continued to decline in July after a sharp increase in March-April 2022. “Seasonally adjusted consumer inflation has not only compensated for its flight relative to the early spring proxy, but even turned out to be lower, which suggests that the current negative CPI readings are not sustainable. The data point to the persistence of pro-inflationary risks and confirm that the summer deflation is caused to a greater extent by one-time factors,” economists say. It should be noted that, according to the Gaidar Institute polls, the price forecasts of industrialists after the deflationary values ​​of June in July became inflationary again (see Kommersant of July 20).

Alexey Shapovalov