Price movements are driven by diverse factors in June
Annual inflation rose to 3.21% in June 2020, with prices moving in a diverse manner. The annual growth of product prices slightly sped up, while that of service prices significantly decreased. These are the findings presented in the new issue of the Bank of Russia’s information and analytical commentary Consumer Price Dynamics.
The progressive easing of the self-isolation regime supported a slight recovery of supply and the realisation of deferred demand for a range of goods and services. Overall, demand remained sluggish, dragged down by the actual decline in incomes, the remaining restrictions (including external ones, primarily with regard to travels), and consumers’ cautiousness. All these factors were putting a downward pressure.
The major contributor to the increase in annual inflation was the material rise in highly volatile fruit and vegetable prices. This acceleration of inflation in June 2020 was associated with the low base, since the earlier harvest in June 2019 caused an unusually large reduction in vegetable prices. Conversely, the monthly growth of consumer prices (seasonally adjusted) slowed down in June.
Further on, current inflation is expected to remain decreased due to moderate demand, while annual inflation will trend up in 2020 because of last year’s low-base effect.