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23 September, Wednesday

Ufa   °

Reasons for inflation acceleration in Bashkiria and other Volga Federal District regions are named

Economy/Business

Annual inflation in the Volga Federal District in June this year increased by 0.2 percentage points compared to May. — up to 3.3%. In Russia as a whole — by 0.2 percentage points, to 3.2%, the press service of the National Bank of Bashkiria reported.

This is mainly due to the effect of the low comparative benchmark of June 2019 in the food market, increased demand for non-food products in the context of easing restrictive measures, and the resumption of activities of enterprises in several industries.

“All these factors increased the annual increase in food and non-food prices in June compared to May. At the same time, the weak growth of consumer activity and the preservation of some restrictions continued to slow down inflation in the service sector,” the National Bank explained.

Meanwhile, in June, the annual food inflation in the Volga Federal District increased to 4.1% after 3.4% in May. This growth occurred against the backdrop of a slowdown in inflation last year, when, due to a warm spring and high rates of the sowing campaign, vegetables of the new harvest hit the market early.

In June, residents of the Volga Federal District bought smartphones, tablets, and TVs cheaper than a year ago due to the increased saturation of the regional market.

The annual inflation in the service sector in the Volga Federal District fell to 2.4%. In May, it was higher and reached 2.8%. This is due to the continued suspension of the provision of certain services in June amid restrictive measures.

The fall in demand for domestic flights and the existing restrictions accelerated the decline in air ticket prices to 6% in June from 2.3% in May.

In June, annual inflation accelerated in all regions of the Volga Federal District, except Bashkiria. Most of all — in the Saratov, Nizhny Novgorod regions, and Chuvashia.

Annual inflation in Bashkiria slowed down, among other things, due to a noticeable drop in prices for air and train tickets, given the restrained demand. It was also affected by a more significant slowdown in the growth of prices for domestic and foreign tourism services than the average for the district, compared to June 2019.

“In general, demand remains low, both due to the drop in income that has occurred and as a result of continued restrictive measures and cautious consumer behavior. The annual growth rate of prices for goods has slightly increased, for services it has noticeably decreased", experts emphasize.

In the future, the current price growth will remain subdued amid constrained demand.

“At the same time, the rate of annual inflation this year will gradually grow due to the effect of the low benchmark of 2019. According to the forecast of the Bank of Russia, taking into account the current monetary policy, annual inflation will amount to 3.7-4.2% in 2020, 3.5-4.0% in 2021, and will remain at the level of 4% in the future," experts of the National Bank predict.

Galina Bakhshieva /translated by Tatiana Aksyutina
Tags: inflation, growth
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