Food production growth constrains inflation in Russian regions

In September, annual inflation in the Russian regions stayed in the range from 2.0% to 5.6%. As for Russia in general, it rose by 0.1 pp to 3.7%. Inflation accelerated in the majority of regions. However, the gradual growth of production and self-sufficiency with respect to main food products continued to constrain the growth of food prices. At the same time, the pass-through of the ruble depreciation to prices acted as a short-term proinflationary factor.

Inflation factors manifest themselves differently in different regions. For example, in many northern regions average September inflation was lower than the Russian average: due to their remoteness and a seasonal nature of supply of many goods, prices here usually react to proinflationary factors slower. Expanding production led to a deceleration of pork and poultry price growth; however, in certain regions (e.g., in the North Caucasus, where pork is far from popular), this factor failed to produce any effect on inflation.

The coronavirus situation was one of the drivers behind inflation this year. Consumer activity declined across the entire country; however, certain regions faced a number of specific consequences of the pandemic. For instance, the timeframes and stages of lifting of restrictions were different. In some regions, trade centres opened as early as in May and people were not particularly affected by restrictions. In others, however, they opened only in July, which led to the accumulation of deferred demand.

Certain price factors of administrative nature are also related to the coronavirus. In a number of regions, utility rate indexation was postponed from July to September. Also, in September, the Ministry of Science and Higher Education recommended that higher education institutions refrain from raising tuition fees, which exerted different influence on inflation in different parts of the country (depending on the number of higher education institutions there).

For details on inflation in the Russian regions, please refer to the information and analytical materials published on the Bank of Russia website. All comments on inflation in the Russian regions will be published throughout 15 October.