Page 39 - RusRPTDec21

rises which threaten to undermine economic recovery.
Inflation hit 8.1% in October, the Rosstat national statistics service said on November 3 — the fastest rate of price increases since February 2016, and more than double the Central Bank’s 4% target. That was up from a reading of 7.4% a month earlier and ahead of market expectations.
Russia’s Central Bank chief Elvira Nabiullina has for months sounded the alarm over global price rises, putting herself at odds with western policymakers earlier this year by warning them the uptick in inflation was not just a transitory phenomenon.
In Russia, surging food prices were behind the latest increase in the headline inflation rate. Food prices have risen by more than 12% over the last year, according to Rosstat, while some staple goods such as fruits, vegetables and eggs have become 25% more expensive over the same period.
Economists say surging inflation, particularly for everyday items, hits poorest households hardest. According to a recent Levada Center poll, Russians rank rising prices as the country’s biggest problem.
Despite recovering to a six-year high in the third quarter of 2021, Russians’ living standards — as measured by real disposable incomes, a closely-watched indicator of household finances — are still 5% lower than they were in 2013.
Russia’s Central Bank has hiked interest rates aggressively with multiple rate hikes this year. Of particular concern to Russia’s rate setters is the prospect of falling into an inflationary spiral, where people fear rapid price rises and so bring forward major purchases or try to stockpile staple goods, thus artificially increasing demand and pushing prices yet higher.
Chairman of the Central Bank of Russia (CBR), Elvira Nabiullina says the rate of price increases for food has reached double digits, and the most vulnerable will suffer first from inflation, the governor said in a speech at the State Duma in the middle of November reports BMB Russia.
Everyday Russians are feeling its effects; a survey by the Higher School of Economics found that 69% of Russians say they are “experiencing financial difficulties.” In her speech, Nabiullina also confirmed the CBR’s forecast of 7.4-7.9% inflation by the end of 2021 and the possibility of raising the key rate from 7.5% at their upcoming meeting.
Food prices are the key factor driving up inflation. The Ministry of Agriculture reports that, because of climate conditions, the wholesale prices of potatoes and cabbage are up 70% year on year. Kirill Tremasov, head of the CBR’s monetary policy department, warned food prices may continue to rise in 2022 due to high prices for raw materials and fertilizer. From November 9-15, weekly
39 RUSSIA Country Report December 2021 www.intellinews.com