Inflation slows down in 2019 amid expanding food supply
In 2019, annual inflation stood at 3% and it continued to slow down in December. This trend was mainly driven by the further expansion of the food supply, appreciation of the ruble, and weak changes in demand, together with one-off events, including base effects. In early 2020, inflation will continue to slow down, as noted in the latest release of the Bank of Russia’s information and analytical commentary Consumer Price Trends.
Food prices increased by merely 2.6% last year, with fruit and vegetable prices decreasing by 2%. As in previous months, food price movements in December were mostly shaped by the high saturation in the food market, appreciation of the ruble, and one-off factors.
Despite the small share of egg prices in the consumer basket (0.5%), their dynamics made a noticeable contribution to the decline in food price inflation in December. In December 2019, they were down by 5% Y.o.Y. because of the base effect (in December 2018, there was a one-off and sharp price increase).
Prices for non-food goods went up by 3% in 2019. As in the previous months of 2019, in December, price changes for non-food goods were conditioned on the moderate demand, appreciation of the ruble, and base effects. A decline in the annual growth of durable goods prices (passenger cars, household appliances, and furniture) was the main contributor to the slowdown in the growth of prices for non-food goods.
Services prices increased by 3.8% last year. In December, the growth of services prices excluding the main components subject to administrative price indexation (housing and utility services, and railway transportation), was 0.1% (seasonally adjusted), which is the lowest value for the past year.