Page 45 - RusRPTFeb19

the cost price at 4–20%. Due to the growth of these costs, selling prices for Russian products can grow by 1–8%, he said. First of all, this will manifest itself in the segment of perishable products that are brought to stores every day.
Representatives of transport and manufacturing companies warned Prime Minister Dmitry Medvedev that rising fuel prices could add 1-8% to cost of consumer goods. The company complained of the possible consequences of tightening the policy of fuel companies towards corporate clients, Vedomosti daily reported on December 18 citing the letter send to Medvedev.
Downstream oil segment in Russia is subject to much regulatory uncertainty. The largest fuel suppliers were hit by the de-facto government regulation of retail fuel prices imposed in November.
Since largest fuel suppliers have cut their corporate support programs, the transportation companies have seen the fuel costs rising by about a third and now warn that they won't be able to contain the extra expenses much longer. Reportedly, the transportation companies estimated the cost of fuel at about 30% of total costs.
Reportedly, the Executive Director of the Rusprodsoyuz Dmitry Vostrikov estimated the share of fuel costs in the prices of consumer goods at 4–20%. Due to the growth of these costs, end selling prices can grow by 1-8%, he estimated.
4.2.2 PPI dynamics
Producer price index spiked to 16.1% y/y in June on the back of soaring oil prices that drove up petrol pieces and hurt industry in 2018. This caused some political blowback and the govt moved to artificually cap prices after teh summer. However, after oil prices fell dramatically in December the PPI fell off too.
Ruble-denominated oil prices started to add more visibly in April, with +45.4% y/y, while in June they surged +74.5% y/y. Given that gasoline makes up 4% of the consumer basket, and taking into account the retail price structure, bankers estimated the total effect on consumer inflation in May at about +0.5pp.
The basket structures of CPI and PPI are completely different. While, for CPI, Rosstat applies the consumption structure, in the case of PPI, it uses the amount of goods produced. Given this, in a sense the PPI basket is closer to that for IP, with the weight of oil-linked industries in the basket close to 28%. It implies the contribution of oil-triggered inflation at about 11pp out of the +16.1% y/y total growth.
45 RUSSIA Country Report February 2019 www.intellinews.com