In Russia last year, prices for cars, gasoline, chicken, eggs, real estate and other goods rose. Rosstat reported that at the end of the year, inflation was around 7.5%, but it felt like the price increase was greater – why is this, explains Natalya Zubarevich, an expert on socio-economic development of regions, chief researcher at the National Research University Higher School of Economics, writes E1.RU.
She noted that everyone’s consumer basket is different, and therefore their sensitivity to prices is different. According to Zubarevich, there is perceived inflation, which is measured by the Bank of Russia, and it is usually 2–2.5 times higher than the inflation measured by Rosstat. The latter calculates inflation for 109 goods and services in 282 cities.
But not everyone overstocks the same way. The expert also added that there is no such thing as an average Russian. In addition, some products become more expensive than others. For example, the increase in poultry prices in 2023 was explained by the fact that the largest chicken egg producers reduced their production volume by 4–6%, and that veterinary drugs also became more expensive.
According to Zubarevich, government spending is what drives up inflation the most. “Often these are unproductive expenses. Their sharp growth leads to an increase in wages,” the expert explained. She noted that “endless injections of money into the military-industrial complex, a wage race and a shortage of workers in the labor market, increasing the growth of wages – all this increases effective demand.” Added to this are benefits to low-income families and an imbalance with foreign trade. The latter has already “caused a fall in the ruble, because foreign currency began to earn little, and importers are in demand for it.”
Zubarevich reassures that there is no risk of hyperinflation, as in the 90s. According to her, the situation is under control: the Central Bank has raised the key rate and will work with the mortgage market. The expert added that since the state subsidizes preferential programs, they are insensitive to the Central Bank rate and prevent inflation from decreasing. Also, the country has sharply tightened the rules for issuing consumer loans, and their volume will already decrease, and the strong growth in lending to the population is one of the factors that affects inflation.
At the same time, Zubarevich noted that in the first quarter of 2024, the inflation potential has not been fully used, and perhaps inflation will rise. “It takes six months for the Central Bank’s measures to take effect,” the expert added.
She did not rule out that railway tariffs will rise in price in 2024 – the cost of road transportation could increase by 30%. At the same time, the peak of price growth has passed in the housing market and in medicines, but some types of medicines will disappear from pharmacy shelves. And prices for a number of products may also increase, but eggs may become cheaper, although this is not a fact – “there is a contribution from imports,” the expert added, warning that Russians in general will have to get used to new prices for everything.
Source: Rosbalt
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