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In anticipation of rising prices themes of the day 04.06.2019 at 21:00

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In Russia the third year of low inflation, at least in its official indicators. However, the inflation expectations of the Russians are extremely high — about 9-10%. Why people do not believe Rosstat and waiting for the worst? And how is unbelief to affect the real economy?

Distrustful population

Annual inflation in Russia in April to 5.2%, but only in this cabbage rose by 23.8%, carrots 11%. This is a short answer why the Russians have high inflationary expectations of 9.4% in April. When the representatives of Rosstat ask people how they believe will increase prices in the next 12 months, they somehow focus on the price tags in stores, and not on official figures of inflation. But consider the situation in more detail: it is sadder than it might seem at first glance.

you Can say that expectations of rising prices are like sensations and real factors. The first is, alas, our historical memory: up to three years of low prices in the country was 26 years old high. "Weak economic data generate in people the feeling that "around the corner" is another episode of the weakening of the ruble, which is usually followed by a rise of prices", — says Exante managing partner Alexey Kirienko. Still fresh memories of the devaluation of the ruble in late 2014, and the subsequent increase in prices, says investment expert Alexander Bystrov. Remember the Russians and the mini-collapses of the ruble in April and August last year, puts the expert in the field of Finance and banking Moscow branch of "Support of Russia" Vladimir Grigoriev.

Another reason for the high inflation expectations are low income. "The third year of low prices does not inspire people with optimism simply because it is accompanied by a five year drop in real income, which completely negate the slight drop in prices", — says Director General of "Ivolga Capital" Andrey Khokhrin. "High inflation expectations of Russians are connected with the depressing socio-economic situation, — the head of Department investiga company "BCS" Narek Avakian. — Incomes are falling for the sixth consecutive year, the average salary in the country do not earn nearly two thirds of working people". "Wages of workers in the most problematic from the point of view of profitability of the production sectors was partially indexed (not even for inflation), while wages of employees of budgetary sphere will grow until October 2019," — said Deputy Chairman of the Board Loko-Bank Andrey lyushin. "And in such circumstances it is natural that consumers evaluate their own inflation is higher, because people with low income, any change in consumer prices is much sharper reflected in their own assessments," — says Avakian.

"According to official data, inflation in the last few years was at a relatively low level, but the trip to the grocery store for most of the population always questioned these figures", — said Vladimir Grigoriev. And this has two explanations. The first is that official inflation is a little more than buying in the store.

We wrote about the fact that in the calculation of inflation in Russia is used for more than 500 products and services. For example, there are wedding rings and coats for men. Few of us tracks the annual change in the price of these goods. But we pay attention to the fact that we buy every day. And there is the situation with prices is far from perfect.


the Second reason is that the poorer the people, the higher for inflation. The fact is that due to declining revenues, the growing share of food expenditure. "And the focus of consumption shifted to lower price segment, the so-called borscheva set. That's where the individual components is observed exorbitant price increase due to high demand — says a leading analyst QBF Oleg Bogdanov. For example, in the first quarter of 2019 the price of cabbage increased by 36%, carrots — on 8%. The whole "borscheva set", according to the Central Bank of the Russian Federation, rose by 18.3%".

this is a real factor of high inflation expectations in the country: when the average citizen comes into the shop, he drew attention to the price of their food set constantly increasing.

How expensive to be poor

In the economy is the concept of "inflation for the poor." Usually the food basket of poor people is going up faster "the average hospital", which is associated with the structure of basket and types of goods. But, more importantly, "inflation for poor" much more painful, because the current consumption of the poor spend most of their incomes compared with wealthier citizens. Almost half of respondents (48,2%) only have enough money for food and clothes, and the purchase of equipment (smartphones, refrigerators, washing machines and other things) — is no more. These data are published at the end of may, Rosstat. And in April, "Levada-center" reported that 65% of Russians have no savings. Naturally, with this budget, any increase in prices is dangerous.

"Among the poor cost structure in percentage shifts towards grocery goods, therefore, we can assume that food inflation is "inflation for the poor." And it is clear: a person needs a specific set of products for their livelihoods, and reduce it almost impossible, — says Alexander Bystrov. But even visually, we can estimate that rising food prices ahead of non-food and services".

for Example, Rosstat noted that since the beginning of the year, tourist trips abroad fell by 1.4%. This is also reflected in the calculation of inflation. "A decrease in the cost of tourist trips abroad or the number of expensive imported goods, from cars to wine, no effect on the lives of people with low income does not provide, and the annual increase in tariffs of the so-called natural monopolies in energy and transportation — having. As they have caused growth of prices for all other goods and services", says Vladimir Grigoriev.

"Strong seasonal fluctuations in the prices of "simple" food products, one-off rises in prices for basic services in the field of housing and communal services make on the poor citizens of Russia (and the median salary, in contrast to the average, below 30 thousand rubles), especially its poorest regions, the impression that prices are rising strongly, regularly and systematically, taking away from them all large chunks of their already modest bread," — says the head of analysis and strategic marketing PSB Nicholas Kashcheev.

But it's not just the poor. "Middle class also sees inflation, not consumption, and checks from shop, petrol and payments for communal services", — draws the attention of the chief economist of rating Agency "Expert RA" Anton tabah. "In our country, with such enormously high levels of inequality of income distribution among the population, the poor on the basis of full can be more than half the population, warns the Director of the Center for financial technology, Financial University Dmitry Trofimov. — Another significant part of the population has a standard of living slightly above the so-called poor". So gradually, "inflation for the poor" becomes a inflation for everyone. Well, except for the Central Bank and Rosstat, of course.

Expectations remain

it is believed that high inflationary expectations lead to real growth and inflation. First, because expecting a rise in prices, people try not to postpone the planned purchase. "As happened, for example, in 2014, many have begun to buy household appliances and automobiles, expecting further weakening of the ruble and rising prices", — cites the example of an analyst investitsionno-the financial company "solid" Vadim Kravchuk. Second, if high inflation expectations are present from the seller or supplier, he goes as quickly as possible to raise the price of their products. In the end, both lead to real growth and inflation.

"However, in practice this does not always happen, but only when the divergence between the two indicators (inflation and real expectations. — Approx. ed.) is really important or when we are talking about individual categories of goods, most often imported," says Vadim Kravchuk. Now in practice there is more. "Although we see a sharp increase in lending (people take loans from banks, rushing to buy goods cheaper), the stagnation of income does not allow retail to significantly increase sales," — said Alexey Kirienko.

High inflationary expectations forced the Bank to keep rates at a high level. For this regulator and its head Elvira Nabiullina often criticized: high stakes do not contribute to the development of credit, so necessary to our business. But perhaps the problem has now somewhat subsided. "The decline of incomes is not conducive to sales growth and the development of production, in many cases depriving of any meaning the loan credit business", — says Dmitry Trofimov.

But, keeping rates at a high level, that is pursuing a tight monetary policy, the Bank of Russia conducts inflation targeting, the purpose of which is to stabilize prices, drew attention to the analyst, "seven rivers capital" Anastasia Sosnova. "However, it is difficult to understand how tight monetary policy can reduce inflationary growth "borsch", which is caused by the desire of the population to have Breakfast, lunch and dinner," says a leading analyst QBF Oleg Bogdanov.

But if prices of vegetables and other basic foods will continue to grow, far beyond the official inflation rate, then rely on the reduction of high inflation expectations among the population not worth it. "They will exist as long as the real economic situation will not change for the better", says Dmitry Trofimov.


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