Food price growth slows down in most Russian regions in July

Slower growth rate of fruit and vegetable prices made the major contribution to restraining inflation in most Russian regions. At the same time, prices for non-food goods increased nearly in all the regions.

In July, annual inflation ranged from 4.5% in the Chukotka Autonomous Area to 9.1% in the Republic of Daghestan. Notably, inflation dynamics were mixed. The numbers of regions where inflation accelerated and decelerated were nearly equal. Generally, inflation slowed down by 0.04 pp to 6.46% across Russia.

In most regions, the deceleration of food price growth resulted from the slower growth of fruit and vegetable prices thanks to the new better harvest of domestic open-field vegetables, a higher output of greenhouse tomatoes and cucumbers, and fruit imports. In some regions, the normalisation of the epizootic situation led to a slower growth in prices for eggs and chicken.

On the contrary, the annual growth rate of non-food prices continued to rise in July in the vast majority of regions. Fuelled by expanding demand, prices for construction materials, furniture and cars increased especially fast as these prices absorbed the higher costs incurred by the producers as a result of a quicker rise in global prices for metals, timber, and products manufactured from them.

Annual growth rates of prices for services accelerated, for the most part, but remained significantly diverse. In most regions, the upward trend was driven by higher utility prices on the back of the low base effect. A year earlier, the annual indexation of utility tariffs was postponed for later months. Lower prices for holiday packages to Turkey restrained growth in services prices across Russia in general.

Inflation accelerated the least in the North Caucasian regions where the impact of nationwide factors related to food price growth is traditionally stronger since food products account for a larger share in the consumer basket.

The highest inflation growth rate was registered in Siberia, which was due to a faster rise in non-food and services prices: construction materials, cars, and air tickets.

For details on inflation in Russian regions, see the information and analytical materials published on the Bank of Russia website.