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Friday, October 21, 2016

The ruble has forced Russians to believe in the slowdown

The optimism of the Russians is increasing day by day. This is evidenced by the results of sociological surveys. Thus, according to the Bank of Russia, inflation expectations in August fell to a low of Oct 2014. In other words, our fellow citizens believe that at the end of this year, price growth will be 6.3–6.4 percent. The positive mood of the population in the CBA to explain the stabilization of the ruble, the reduction in the cost of certain types of products, and electronics. Thus in the Central Bank are more optimistic. According to the Deputy Director of the Department of monetary policy of the Central Bank Andrey Lipina, the inflation till the end of 2016 will slow to 5-6%.

photo: Gennady Cherkasov

In fairness I must admit that August was remarkable in part to deflation. The price tags on the shelves came down, and especially at the expense of vegetables. “The price decline was due to seasonal cheapening of fruits and vegetables — potatoes, onions, tomatoes, cabbage. As a result, the population there was some hope that food prices at this level will stay for a long time” — says “MK” the analyst of “ALOR BROKER” Eugene Korukhin.

Meanwhile, the meat of the decline in price was in no hurry, pork, and beef has risen in the past month, about 0.5–1%. “The decline in vegetable prices is a temporary phenomenon. The price of meat is much more revealing. They are seasonal factors is almost prone to say that prices are still growing. This means that in November along with the meat will start to go up dramatically, fruits and vegetables, which will lead to another round of accelerating inflation”, — the expert continues.

In addition, the false hopes of our citizens gives entrenched in the last time the ruble. “The record yields and a desire to ensure the positivity in the consumer market ahead of the elections, which coincided with the strengthening of the rouble in August, have created all the necessary preconditions for the growth of optimism among Russians”, — said Korukhin.

“Now the national currency rate stabilized at the level of 65,3 rubles per dollar — and create a sense of false stability that the worst has passed and now the ruble will begin to strengthen, and with it will cease to increase prices”, — says General Director of “Mani Fanny” Alexander Shustov.

However, the picture in the oil market can change radically in a few months, and with it the position of the national currency. More and more experts agree that prices for “black gold” can reach the local lows, dropping below $40 per barrel. “If that happens, we will see the weakening of the national currency — 70 rubles per dollar, which will slow consumer activity and acceleration of inflation up to double-digit levels,” predicts senior analyst AMarkets Artem Deev.

According to experts, one of the key factors constraining the inflation rate is a key rate that is 10.5% per annum. “But entrepreneurs have long complained about the high cost of credit and constantly talking about the need to stimulate lending to small and medium business through the lowering of the key rate. However, the Central Bank is adamant and is refusing to significantly lower the rate. But perhaps, before the end of this year the regulator will change its position. If the key rate will be reduced, the Russian economy will gain momentum for growth. However, along with it momentum and get inflation speeding up to 8-9%, warns the General Director of “Mani Fanny” Alexander Shustov.


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