The consumer price index from the beginning of the year to October inclusive was 109.3% (for the same period in 2006 it was 107.5%). The biggest growth continues to be characterized by the movement of prices for food products (103.3% in October in relation to September).
The Economic Development and Trade Ministry has increased substantially (to 11%) the upper limit of the forecast corridor for inflation. Meanwhile, the dynamics of the CPI in the past two months is such that, taking into account the traditional pre-New Year hike in prices, it may well exceed the planned government figures.
Monetary authorities have in reserve a set of instruments with the help of which it is possible to correct to a small extent the movement of prices. However, in the current situation, when domestic inflation increasingly depends on the prices of imported products, the effectiveness of the government's action is declining.
Thus, a worldwide rise in the price of grain, processed grain products, as well as dairy products continues to have a serious impact on the movement of prices within the country despite the fact that the situation in the world market for wheat has begun to gradually stabilize. A substantial increase in basic inflation should be noted (in October the index of basic inflation was 102.1%), the cause of which was the same movement of prices on food products.
The basic consumer price index excludes various short-term price changes, the most important of which is seasonality, but the growth in the price of food products, this year, as we know, is conditioned by other reasons. The effectiveness of the changes in export and import duties has not yet been established. Trying to "freeze" prices on some products also failed to produce significant results, if not to say that the result backfired. Firstly, sellers were aware of the impending fixing of prices, so prices were raised in advance to offset future losses. Secondly, the population, fearing further price rises, stocked up on goods, thus increasing demand, which further stimulated inflation. The negative inflationary expectations have already begun to push up the prices of non-food goods.
Despite this, concerns about the fly-wheel of inflation coming undone, in our view, are excessive. The integration of the Russian economy into the world economy is becoming increasingly significant. This means that importing, which was one of the main reasons for the increase in prices within the country in recent months, could become a factor holding back inflation. This is evidenced by, among other things, the fairly moderate forecasts of price growth in the euro zone, as well as in other developed countries.
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