Updated findings on non-monetary inflation factors
The Bank of Russia has published its second report on the analysis of how price trends are affected by factors that are beyond the scope of monetary policy measures. According to the authors of the study ‘Non-monetary Inflation Factors in 2017–2019', analysis of the role of non-monetary factors is as important as ever.
Over the period under review, inflation and its volatility were materially impacted by the supply of food products and agricultural raw materials, regulation in the utilities sector, and institutional changes. In early 2019, the VAT rate increase also affected inflation. In certain markets, price movements were driven by export parity pricing and imperfect competition. In 2018, these factors had a notable impact on the petroleum product market.
The report particularly focuses on the regional specifics of the influence of non-monetary factors. Among other things, analysis of these specifics is needed to implement the standard for competition promotion in the constituent territories of the Russian Federation. This work is carried out by Bank of Russia regional branches.
The authors of the report conclude that, as before, non-monetary factors may entail inflation risks. In this regard, it is essential to continue the implementation of measures aimed at further upgrade of the agricultural sector and enhancing its logistics, promoting competition and improving tariff regulation, as well as at institutional changes in general.