Deflation in Russia continues: price fall in July is 0.39 percent

According to the Russian Federal Service for State Statistics (Rosstat) on August 8, annual inflation in the country has slowed to 15 percent. According to them, deflation rose to 0.39 percent in July this year compared to the indicator in June, when deflation reached 0.35 percent. In the previous months from January to May, the Russian statistical office had registered inflation: 0.99 percent in January, 1.17 percent in February, 7.61 percent in April and 0.12 percent in May.

The deflation in July was therefore greater than economists had previously forecast: the federal statistics service Rosstat had assumed 0.2 percent. Without this annual indexation of housing costs, which usually takes place in July, deflation would have been even higher.

In July 2022, the consumer price index was 99.61 percent compared to 110.98 percent in December 2021.

Food prices fell 1.53 percent in July. Compared to the same period last year, however, they increased by 16.76 percent. Fruit and vegetable prices fell by 11.53 percent in July and rose by 6.04 percent compared to 2021.

In July, cabbage cost 33.2 percent less. Potato prices fell 27.6 percent. Beets were 27.1 percent cheaper, tomatoes 14 percent, carrots 13.3 percent, cucumbers 7.7 percent and apples 5.9 percent cheaper. Other foods such as eggs (4.4 percent), sugar (3.5 percent) and sunflower oil (1.4 percent) also cost less.

Prices for non-food items fell an average of 0.44 percent in July and rose 16.50 percent year-on-year. The strongest price falls were recorded for two-chamber refrigerators (6.3 percent), chipboard (6.0) and cameras (5.6). Fuel prices remained unchanged.

However, prices for services increased by 1.41 percent compared to the previous month and by 10.75 percent compared to the previous year. Economists explained this with the indexation of housing costs. Prices for transport services increased significantly – namely by 3.26 percent.

On July 22, Russia’s central bank lowered the key interest rate from 9.5 to 8 percent. At the same time, the central bank lowered its inflation forecast for 2022 from 14-17 percent to 12-15 percent. Their forecast of 5-7 percent for 2023 and four percent for 2024 remained unchanged.

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