In the heat of record inflation since 1999, the Russian economy was thrown into a deflationary cold.
The consumer price index, which tracks the cost of hundreds of key goods and services, fell for the ninth week of the last eight, Rosstat reported.
For June 9-15, it lost 0.17%, a week earlier – 0.03%, and in June – 0.35%, which was the first case of deflation in the first month of summer in the entire modern history of the country. Annual inflation, which set a 20-year record of 17.8% in April, continues to slow down, although it remains in double digits at 15.4%, according to the Ministry of Economic Development.
Over the past two months, a positive rise in prices was recorded only once – at the beginning of the month of July, when housing and communal services tariffs were indexed, Dmitry Polevoy, Investment Director of IC Loko-Invest, notes. The reasons for the slowdown in inflation are still the same, he continues: cheaper fruits and vegetables, the growth of the ruble and the rollback of prices after the spring jump.
Food inflation, which reached almost 20% in April, retreated to 17.2% after 22 out of 29 goods included in the state food basket fell in price over the week, according to Rosstat.
According to official data, since the beginning of July, apple prices have fallen by 2.8%, carrots have become cheaper by 6%, tomatoes – by 7.5%, potatoes – by 16.3%, cabbage – by 21.7%.
In addition, Rosstat recorded a decrease in prices for medicines (0.2% in two weeks), building materials (-2.8%), sugar (-2.2%), eggs (-2.7%), buckwheat (-1, 7%).
The effects of weak demand are clearly visible, says Polevoy: Faced with a new wave of falling real incomes, people are saving more and retail chains are forced to introduce discounts to keep cash flowing to the box office.
According to NielsenIQ, half of all goods sold in July (48%) went into the hands of buyers on shares or with dixon. This is practically the only way to keep sales going when prices have risen and people don’t have more money, says Marat Ibragimov, a senior analyst at Gazprombank.