Cold spring warm up prices

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Холодная весна разогреет цены

Inflation may accelerate in the third quarter of this year. Blame for this is the cold spring weather, which can lead to crop failures of fruits and vegetables. However, if in the future will not happen something extraordinary, then CB will probably be able to keep year-end inflation close to the target level of 4%. To prevent the regulator to achieve its goal can the sharp weakening of the ruble, experts say.

The Bank of Russia does not rule out higher rates of food inflation in the third quarter of 2017 due to the cold spring and early summer. This is stated in the Bulletin of the regulator, “what do the trends.”

“The cold spring weather can lead to reduction in the harvest of vegetables and fruits that will entail the acceleration of seasonally adjusted price growth in the third quarter of 2017”, — is specified in materials of the Central Bank.

As explained by the controller, the acceleration of growth of prices for fruit and vegetables and some types of services have become drivers of growth in consumer prices in April by 0.35%. According to Rosstat, may inflation was 0.4% in five months, from 1.7% (for the same period of 2016 2.9%) and may of the current year to may of last year — 4,1% (it actually equals the target level of the Central Bank at 4%).

When it won control of inflation, that finally managed to overcome, has in recent years become a matter of pride for officials. As recently stated in an interview “Газете.Ru” head “Rosnano” Anatoly Chubais, the reduction of inflation to 4% — “this achievement personally, Elvira Nabiullina (head of the Central Bank. — “Газета.Ru”) and, of course, Anton Siluanov (Finance Minister. — “Газета.Ru”) historic proportions. This is the most accurate word — that is of historic proportions”.

Indeed, the Bank of Russia under the leadership of Elvira Nabiullina, despite criticism, has consistently pursued a tight monetary policy, by aiming to achieve 4% growth in prices by year-end 2017.

“The weather certainly affects the prospects for the harvest this year. Accordingly, if the harvest is less than last year, fruit and vegetable products will also be less. So, higher the flow of imports into our country and higher prices”, — said the chief economist BCS Vladimir Tikhomirov. According to the expert, last year was a good harvest, and on this background there was a seasonal decline in prices for vegetables and fruits. This year it will be not so noticeable and, of course, it will affect the General level of inflation.

First of all, the prices will grow on vegetables, fruits and cereals, says Tikhomirov. While it is unlikely that there will be a rise in grain prices. “If the grain harvest will be the situation slightly worse, the maximum that can happen, it will decrease the volume of exports,” — said Tikhomirov.

Agrees with him Deputy Director of “development Center” Higher school of Economics (HSE) Valery Mironov.

“Usually in August, when a good harvest is deflation, and if there is a bad harvest, we can expect price increases at a time when they are usually stable in July and August.

In the end, inflation could be higher than forecast, but its size will depend on what impact the weather on the harvest,” he said. So, in 2016, due to seasonal factors in July inflation has made 0,5%, in August it was zero, and in September — by 0.2%. Thus, for example, in the off-season inflation is usually higher. So, in January of last year, prices rose 1% in February and 0.6% in March — on 0,5%.

According to Valery Mironov, rising prices because of bad weather this year may be “the range of a few tenths of a percent”. The same assessment result and other experts.

However, as crop failure will lead to the growth of imports and the ruble is unstable, then for the daily expenses of Russians the weather can affect very significantly. “The fall of the ruble, the impact of crop failure will be stronger,” — says Mironov.

Specific reasons for the unrest no, because we don’t have drought, he said. However, the rise may be all that is poorly stored, is tomatoes, potatoes, cucumbers, says Mironov. On apples and pears heavy rains do not affect, therefore, to expect growth of the price they are not worth it, said the expert.

Chief economist at Eurasian development Bank Yaroslav Lisovolik believes that inflation this year will be below 4%, no matter what the weather.

“The reference point CB of 4% will be made. The factor of crop failure may play a role, but is not decisive,” — said the expert.

However, this happens only if you don’t weaken the ruble.

If the Russian currency will start to fall, it will give an additional inflationary impulse, which will cast doubt on the implementation of the plan of the Central Bank, said Lissovolik.

For the assessment of the earlier “the Center of development” HSE, the effect of the strengthening of the ruble exerted on inflation had to be at least 0.5 percentage points in the first quarter of 2017. For the December — March 2017 ruble rose by 12%.

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