The overwhelming majority of Russian regions reported an increase in annual inflation in December 2020, ranging from 1.9% in Chukotka to 7.3% in the Republic of Dagestan. The nation-wide average inflation rose to 4.9%.
Price movements were mainly driven by general factors such as rising costs, regulatory measures in the food market, anti-epidemic requirements, and deferred effects of a weaker ruble. In a number of regions, among impactful factors were specific pricing conditions.
In this way, meat product prices came in under upward pressure from rising input costs in part due to exchange rate changes. Rises in energy costs, due to the cold winter, fed through to greenhouse vegetable prices. The temporary phytosanitary import curbs put pressure on the market for tomatoes. In the Far East, price trends in the vegetable market were affected by reductions in supplies from China, on the back of anti-epidemic steps.
Highly saturated markets in some regions helped slow down prices, however, for some vegetables (e.g. potatoes in Karachay-Cherkessia and cucumbers in Kabardino-Balkaria). The price caps introduced by the Government were instrumental in overall trend stabilisation or a decline in sugar and sunflower oil prices across most regions.
Consistent with previous years, Chukotka posted the lowest rate of inflation. This is explained by the local authorities’ measures to check prices for socially important food products. In December, growth in fish and fish product prices slowed down in the region, helped by a major supplier’s decision to stop supplies outside the district to meet internal demand.
The previous months’ weakening of the ruble continued to feed through to prices of imports and domestically produced items with a large import component in costs. Furthermore, the pass-through effect in the car market was expedited by a faster recovery in demand relative to supply. Prices for furniture, construction materials and home products were under the influence of strengthened demand in the housing market, which came as a result of declining lending rates and the impact of concessional mortgage lending programmes, among other things.
In the run-up to the New Year holidays, with restrictions in place on outbound travel, demand was growing for domestic tourism, leading to accelerated growth in prices of health resort and transport services.
Further details of inflation trends in Russian regions in December are given in information and analytical reviews published on the Bank of Russia website.
This news item was originally published by the Central Bank of the Russian Federation (CBR RU). For more information, see the Source Link.