Page 36 - RusRPTJul22

is held by gas supplies from the east (Russian gas, gas supplies from Ukraine, as well as withdrawal of their gas from Ukrainian underground storage facilities by European companies), followed by supplies from the North Sea (mainly Norway’s gas), which amounted to 22%. Meanwhile, as of May the share of LNG was even higher reaching 31%, whereas starting May 10 gas supplies from Norway (24%) even surpassed Russian gas deliveries (23.9%).
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2.11 Statement by Bank of Russia Governor Elvira Nabiullina in follow-up to Board of Directors meeting on 10 June 2022
Good afternoon! Today, we have made the decision to decrease the key rate by 150 basis points to 9.5% per annum.
Inflation is slowing down, including owing to a stronger ruble and lower inflation expectations. This made it possible to cut the key rate again today. However, the very low price growth rates we have been observing in recent weeks cannot be considered to be steadily low inflation. They are mostly associated with a downward adjustment of prices after the surge in March. Moreover, proinflationary risks are still considerable.
I would now dwell on the factors behind our today’s decision. First. Price growth significantly decelerated in May—early June.
However, we are not too optimistic about this fact. Indeed, prices in a small group of products (making approximately 10% of the consumer basket) did not simply rise more slowly in May, but even declined. These were mostly food products generally characterised by elevated price volatility (certain fruits and vegetables, eggs, and sugar). Prices for durable goods edged down as well, although they had been growing at a double digit pace until just recently. Speaking of the absolute majority of products, prices are still considerably above 4% in annualised terms, despite their slower rise.
In February—March, households stocked up with goods and non-perishable foods for several months ahead. People are using them gradually, due to which are probably buying less currently. Furthermore, businesses notably raised prices, fearing a weakening of the ruble, among other things. Today, when the situation has stabilised, not all people are ready to purchase goods at such prices. Hence, prices are adjusting downwards. Nonetheless, the situation might reverse. Stocks will run out, and people will consume by making new purchases.
36 RUSSIA Country Report October 2020 www.intellinews.com