Sugar, which was the leader in price growth in mid-March, rose in price not so much in the reporting week – by 6.5%. In the week leading up to March 25, the product disappeared from some stores due to rush demand.
Tomatoes have also dropped out of the list of products that have steadily risen in price since the end of February. For three weeks in a row, they grew in price by about 10%, but last week, they fell in price – by 0.7%.
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The slowdown in the rise in prices for fruits and vegetables Rosstat calls one of the reasons for the decline in inflation last week. If from March 12 to March 18, prices in this segment increased by 3.83%, then by March 25 they slowed down to 2.7% per week, follows from the agency’s data.
“This is due to the fact that four types of fruit and vegetable products — cucumbers, tomatoes, apples and bananas, whose combined share in the structure of household consumer spending is 2% — fell in price last week or slowed down the rate of price growth,” Rosstat commented.
The only product that has been dropping in price on a weekly basis all this time become cucumbers. Since the beginning of tough sanctions, cucumbers have fallen in price by 15.2%, follows from RBC’s calculations based on Rosstat data.
In the category of non-food products, the rate of increase in the price of goods that grew in price by double digits immediately after the imposition of sanctions, such as cars, TVs, smartphones, and electric vacuum cleaners, decreased. Last week they rose in price by 0.1-3.9%, while TVs fell in price by 0.8%.
What’s next for inflation?
In March, inflation expectations of the population for the year ahead rose sharply – to a maximum over the past 11 years, informed Central Bank. The median estimate of inflation expected in the next 12 months was 18.3%.
Analysts at VTB Capital expected inflation for the week to March 25 in the range of 1.6-2.2%, which was higher than the figure recorded by Rosstat.
“The slowdown in weekly inflation by almost half is a pleasant surprise, although 1% per week is still a lot. The price peak has probably been passed, but the next important question is how quickly inflation can return to more acceptable levels,” says Dmitry Polevoy, investment director at Loko Invest. The growth rate of the ruble against record lows in March will contribute to a decrease in the pace of price dynamics, he believes. In this regard, the analysts of the investment company revised their monthly inflation forecasts for March, reducing them from 7.5–10% to 8–9%. Rosstat will present monthly inflation data for March next month.
“We are still waiting for 20-25% at the end of the year, the annual rate will be high until the beginning of 2023. To predict monetary policy and understand the dynamics, you need to look at monthly indicators with the elimination of seasonality in annual terms: their noticeable decrease will be a signal for a gradual reduction in the Central Bank rate, ”adds Polevoy.
“The peak of price growth is most likely passed. The strong strengthening of the ruble will soon have a positive impact on price pressure,” agrees Mikhail Zeltser, an expert on the stock market at BCS World Investments. On the evening of March 30, the dollar on the Moscow Exchange is trading at the level of 84.4 rubles, while earlier in March the rate reached almost 120 rubles. At one of the next meetings, the Central Bank may even lower the key rate, the analyst does not exclude.