Annual inflation fell
The annual inflation rate fell from 15.9% in June to 15.1% in July. It slowed down for the third month in a row, but the deceleration rate has become less. If inflation fell by 1.2 percentage points in June, then in July 0,8.
First of all, the annual price growth slowed down due to fruit and non-food products.. Year-on-year price increases were 6,04 And 16,5%, whereas in June it was 11,63 And 17,92%. But the growth of prices for services accelerated: from 10.17% in June to 10.75% in July.
The annual core inflation rate also fell by 0.78 percentage points., from 19,18 to 18,4%. This indicator does not take into account the various volatile and adjustable components: prices for some fruits, Housing and communal services and so on.
Monthly inflation too
In July, consumer prices adjusted for seasonality (seasonally adjusted, TO) fell on 0,27%. Similarly, prices fell in June..
Food fell by 0,7%. Most of all, fruit and vegetables fell in price - on 5,65%. All other products for the month almost did not change in price. Non-food products fell by 0,35%, but services taking into account housing and communal services have risen in price by 0,48%.
Monthly core inflation also eased: from 0.23% in June to 0.09% in July. Despite the decline, the indicator itself is still above zero, that is, the basic prices for the month have grown. Looks like, if you buy something, except vegetables, falling prices may not be noticed.
Median inflation for the month did not change and remained at the June level - plus 0,12%. As the decline in annual inflation also slowed down, The Bank of Russia suggested: disinflationary processes may fade. That is, soon the average prices will cease to fall..
Reasons for deflation
The Bank of Russia named several reasons, for which average prices fell over the month. Here are the main:
- large offer of fruits and vegetables, expectations of a record grain harvest and state support for the agro-industrial complex;
- limited export of agricultural products, which increased the supply in the domestic market;
- restrained demand – for example,, for goods of second necessity, which rose in price in March;
- strengthening of the ruble in recent months, which has a delayed impact on consumer prices.
Many of these causes are temporary.. For example, The ruble in July has already managed to weaken almost by 20%. This is another argument in favor of, that price declines may slow down in the future.
This means, that the Bank of Russia may reduce the key rate at the next meetings not so aggressively. There are other reasons for this.. Here are some of them:
- inflation expectations of the population and business have noticeably decreased and returned to the level of spring 2021;
- business activity slows down, than the Bank of Russia assumed earlier;
- new trade and financial sanctions may weaken the ruble and cause a second wave of inflation.
Since April, the regulator has reduced the rate five times: first three times on 300, and then twice by 150 basis points. As a result, it dropped from 20 to 8%. At the September meeting, the regulator may lower the rate on 50 basis points or even take a short pause.
According to the forecasts of the Bank of Russia, by the end of 2022, inflation will drop to 12-15%, and by the end 2023 — up to 5—7%. Now the largest banks accept rubles on average at 6.8% per annum - just at the level of expected inflation.
While the question remains open, will deposits be able to fully offset the rise in consumer prices, or will actual inflation be higher.
