The effect of the transfer: what’s more expensive due to the fall of the ruble :: Economy :: RBC

The depreciation of the national currency, as a rule, leads to the acceleration of inflation due to the factor of transfer of import prices. RBC figured out how to affect the price of the current 10 percent weakening of the ruble

Photo: George Shpikalov / TASS

Since the beginning of August, the ruble has fallen more than 10% — if 1 Aug the dollar was worth about 63 rubles., as of September 11, he was kept around 70 RUB Inflation, the fall of the Russian currency is not dispersed, although it accelerated in August (mainly due to a weak harvest). Food prices rise sharply should not — retailers have adapted to changes in currency, experts explain, and the most significant impact devaluation will have on tourist services and imported goods, in particular cars.

What happened in August

Almost a year inflation was below 3% (target CBR of 4%), but this period ended in August, price growth accelerated to 3.1% in annual terms. In July inflation was 2.5%. Acceleration in August coincided with a new stage of the fall of the ruble exchange rate which weakened amid the threat of new sanctions.

But inflation in August grew at the expense of the transfer of the course: first of all, the accelerated price growth was shown those products, which are more influenced by other factors, explains the macro analyst of Raiffeisenbank Stanislav Murashov. For example, pork for August rose by 2.6% and in July — only on 0,5–1%. It was affected by African swine fever, explains Murashov.

The acceleration of inflation in August is mainly due to the low base last year, says economic development in the review “the Picture of inflation” (*.pdf). According to him, the contribution of the ruble weakening the inflation rate was on the order of 0.1 PPT in August, and at the same level it will continue in September and October, “taking into account the distributed in time influence the exchange rate on inflation, and also taking into account the reduction of the transfer effect observed in the last two and a half years”. In connection with a substitution share of imported goods fell sharply compared with 2014, said head of the laboratory for research in inflation and growth, Higher school of Economics Vladimir Bessonov. “The effect of the exchange rate pass-through is not as strong as it was then, he said. — The decline of the ruble exchange rate is small compared to what it was in 2014.” In 2014, the Bank of Russia assessed the contribution of the ruble weakening in inflation of 2.6 percentage points (inflation for the year amounted to 11.4%).

That will not affect the fall of the ruble

In General, food products for August as for July fell 0.4%. “The acceleration of inflation in August has less to do with the ruble, but with the limitations of agriculture — last year selkhozmash has developed significantly better than this, and, of course, it influenced prices,” says chief economist “PF Capital” Evgenie Nadorshin. The Ministry of economic development says that the magnitude of the summer decline in prices of vegetables and fruits this year were lower than in the past, including due to the increase of prices for imported fruit, associated with the weakening of the ruble.

“As part of the traded agricultural products, such as grain, which is quoted in dollars, it is clear that its price in rubles (especially in the exporting regions) responded quickly, a little increase in price and some baked goods. However, the proportion of grain in the bread is very modest, and the bread on the stock exchange not traded, so even if the grain is somehow reacted, in the basket this influence is still plainly not had time to transfer and will be quite modest”, — says Nadorshin. In August growth of prices of baked goods remained at the level of July (by 0.3% compared to the previous month), follows from the data of Rosstat.

Retailers have adapted to the changes of currencies. As explained Murashov, although they can not ignore the great weakening of the ruble, but the small “trying to disguise, for example, to keep the prices of goods markers (bread, vegetables. — RBC), but to raise prices for the impulse goods (goods that the consumer buys unplanned. — RBC)”. “You have to understand that the average check of retailers since the beginning of year does not grow at all. If prices increase now, the revenue of the retailer will fall. The retailer is not necessary, so it is better to take a share of the costs than raise prices,” — says the analyst. In August, the average check (it evaluates “ROMIR”) decreased for the fourth consecutive month and reached 496 RUB that was at least the last four years.

Prices on products that Russia imports from the CIS or Turkey also did not grow, as the weakening of the ruble is offset by the devaluation of national currencies of the trading partners of Russia, explains Nadorshin. “Actually, a very large number of imported us goods are manufactured in developing economies whose currencies in recent months fell significantly against the dollar. For example, in the case of Turkey, the devaluation of the Lira blocked the weakening of the ruble. This means that goods from these countries in many cases more expensive will not be because of a past depreciation of the ruble,” he says.

On household goods the weakening of the ruble also has little effect, said Murashov. In many ways their production is localized, and companies collect equipment from parts purchased at the old rate. Dealers also understand that if they raise prices, their revenue will fall, says Murashov, so I try to hold them back.

Appliances are mainly produced in Asia, and a substantial part of Asian currencies, including Chinese yuan, fell in recent months, says the Nadorshin. “The ruble ahead of their impairment, so the cost can be expected, but I don’t think it will be quickly transmitted to local prices. Many Chinese brands, as shown by 2014-2015, do it gradually, they shift the weakening of the currency on consumers not dramatically. If the ruble will adjust, but will remain at the level of 70 rubles per dollar and above, then after some time the prices for some these goods can rise, but it will be, for example, with the new year,” says the analyst.

The representative of the group “M. Video-Eldorado” RBC reported that these retail networks have not yet changed price policy and do everything possible to maintain prices. “Retail prices for equipment do not only depend on exchange rates and, as experience has shown 2014-2015, react to the weakening of the ruble, a slowdown and to a lesser extent. In April (when the ruble weakened due to the introduction of new sanctions. — RBC) this year, we were able to save costs and dispense with increase,” he said.

Photo: Anton novoderezhkin / TASS

And what affect

However, the weakening of the ruble will bypass not all categories of goods. It will affect part of the goods imported from Europe, Nadorshin specifies. The devaluation will also affect the prices of cars — GM, Land Rover and Ford have already announced price increases in connection with the fall of the Russian currency. Since September, the cars of these brands will rise by 1-5%. However, major mass-market brands — Lada, Kia, Renault, Mitsubishi — prices to be. Vice-President of Renault Group and head of region Eurasia Nicolas Moore told RBC that the decision needs to understand at what level stabiliziruemost ruble.

Car prices the weakening of the ruble affects through import of components and capital equipment, explains Bessonov, but the Assembly largely been localized. So first of all, the weakening of the ruble will affect the elite and exclusive automobiles that are not assembled in Russia, the economist said. The price increase will not exceed 10% and will affect all positions, waiting Nadorshin.

More expensive and travel services, experts say. Prices for tickets have grown in mid-August 6-8%, and from Wednesday, as reported by the Association of tour operators, will increase by 2%.

International influence

More on the acceleration of inflation can influence international processes. Price growth accelerated in developing countries — Turkey, Argentina, South Africa, and also in the developed (and there currency is not weakened, but rather strengthened), says Nadorshin. “We can assume that we are moving to a phase of economic development with more rapid inflation. With high probability it will be accompanied by even slower growth rates. Inflation in the world at large will automatically affect Russia, so the ruble may not be cheaper, but some goods may continue to rise in price in rubles after some time, because rising costs of production,” notes the analyst.

Inflation in Russia next year due to the increase in VAT and the devaluation will increase by 3 percentage points and will reach 6%, expects BCS senior analyst Sergei Suverov. The effect could be more, but it reduces the weak consumer demand, he explains. “In the food market more domestic goods, and therefore on food prices is less affected. More — the prices on electronics, clothes and other nonfood products, says Suverov. — The share of imports in the consumer basket is roughly one third”.

Nadorshin not expecting inflation above 5%, however, according to him, “on the horizon year of higher global inflation and high uncertainty in Russia due to sanctions and oil prices can create increased inflationary background in Russia.” “It may be broadcast in the growth of the already high inflationary expectations of the population that will become a problem for the Central Bank, and the economy as a whole,” says the analyst.

The Department of research and forecasting, the Central Bank expects year end inflation to move to target 4% (*.pdf). In 2019 it will temporarily exceed 4%. This, in particular, will affect the government’s decision to raise VAT from 18% to 20%. According to the consensus forecast Bloomberg, the peak of inflation will be in the third quarter of next year, when price growth will accelerate to 4.6%.

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