The main causes of inflation in Russia in 2018

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In December 2018 consumer price index in Russia, according to Rosstat data, has exceeded all official forecasts, an increase of 4.3% (annualized). And in December inflation compared to November rose 0.8%, while in November the inflation rate amounted to only 0.5% in October. However, the results for 2018 were not so sad and gave us a pleasant surprise: in January-December 2018 the growth of inflation over the same period of 2017 is only 2.9%, which was below the value of 2017 when inflation for the year rose 3.7%. Well, now with this official figure of 2.9% we will have to live for a year, although against the background of rising inflation in December she looks too optimistic.
In December of last year, inflation jumped at an annual rate due to the rise in food prices, which increased by 4.4% year-on-year, even more than the prices of non-food commodities, including gasoline and the cost of services. Leaders of growth of prices in December in annual terms, steel sugar (28.3%), eggs (nearly 26%), meat and poultry (9.7%). Note that the strongest growth in December over the month showed eggs, the rising prices which in November amounted to 15.4%.
The reason for rise in price of eggs and poultry meat has been increasing feed prices, while sugar – low yield of sugar beet. But, apparently, such a sharp jump in prices for eggs in December was the result of a pending price increase on this product prices began to rise only at the end of 2018, while the number of other products prices gradually increased first in the fourth quarter of last year. At the same time for the entire 2018, prices for eggs rose only 2.7%, and the sugar, sunflower oil, cereals and pasta prices, if you believe Rosstat, even declined.
Prices for gasoline in December 2018 has risen 9.4% yoy, and compared with November, they declined, according to Rosstat, by 0.1%. For the whole of 2018, gasoline prices rose 9.6%, while tobacco products for the year rose by 9.7%. In the service sector for the year 2018, the highest growth of foreign tourism services (9%) and education (almost 8%).
We believe that by the end of 2019, inflation is at a level higher than 5%. And personal inflation is simple, the buyer will be assessed at least twice.
Natalia Milchakova,
Deputy Director of information-analytical center,