Cold Weather behind Food Prices Uptick in June 2017 Moscow Russian Federation 9 1 2017
THIS REPORT CONTAINS ASSESSMENTS OF COMMODITY AND TRADE ISSUES MADE BY
USDA STAFF AND NOT NECESSARILY STATEMENTS OF OFFICIAL U.S. GOVERNMENT
POLICY
Voluntary
- Public
Date: 9/1/2017
GAIN Report Number: RS1749
Russian Federation
Post: Moscow
Cold Weather behind Food Prices Uptick in June 2017
Report Categories:
Agricultural Situation
Agriculture in the News
Approved By:
Deanna Ayala
Prepared By:
Staff
Report Highlights:
According to Russia’s Federal State Statistics Service (Rosstat), Russia’s headline consumer price index
(CPI) rose to 4.4 percent year-on-year in June 2017 from 3.5 percent at the end of March 2017. Food
prices drove the CPI increase, spiking to 4.8 percent year-on-year in June 2017, up from 3.5 percent at
the end of March 2017. The key factor behind the increase was inflation in the fruit and vegetables
segment fueled by reduced supply and delay of the new harvest due to the unusually cold weather in the
period. The CPI uptick in June is seen as temporary with Russia currently on track to end the year
comfortably within the 4 percent annual CPI target set by the Central Bank of Russia.
General Information:
According to the Russian Federal State Statistics Service (Rosstat), Russia’s headline consumer price
index (CPI) totaled 2.3 percent in June 2017 (since the beginning of the year), compared to 3.3 percent
registered in June 2016. The food products component of the headline CPI number1 reached 3.4 percent
at the end of June 2017, up from 3.2 percent year-to-date at the end of June 2016.
Chart 1. Food Products CPI in 2013-2017 (Percent change from December of the previous year)
Source: Rosstat
On an annualized basis, the headline inflation rate in the second quarter of 2017 rose to 4.4 percent yearon-year in June, up from the historical low 4.1 percent at the end of April and May 2017. The food
products component of the headline CPI number spiked to 4.8 percent year-on-year in June 2017, from
3.5 percent at the end of March 2017. The key factor behind the increase was inflation in the fruit and
vegetables segment where prices jumped 8.3 percent month-on-month in June 2017 fueled by reduced
supply and delay of the new harvest due to the unusually cold weather in the period.
The June CPI uptick proved to be short-lived, however, as headline inflation fell to 3.9 percent year-onyear and food prices declined one percent month-on-month in July with the start of the new harvest
supplies. Prices fell 0.1 percent on a weekly2 basis for three weeks in a row through August 14 and
came in flat the week ending August 21. Weekly declines of prices for fruit and vegetables in the range
between 3.6 and 3.9 percent were the main driver behind the deflation. For more details on weekly food
price movements reported by Rosstat please see the table below.
1
According to Rosstat, in 2017, the weight of food products in the structure of its headline monthly CPI number is 38.08
percent, while the share of non-food items is 35.67 percent and services account for the remaining 26.25 percent of the total
CPI.
2
Weekly price changes are registered by Rosstat every Monday for select items in three categories - food, non-food, and
services, in 275 cities across Russia. Such weekly monitoring results feed into the calculation of the weekly CPI estimates
published by Rosstat every Wednesday. However, as Rosstat explained in its August 2014 presentation, while its weekly
CPI estimates reflect the general trend of consumer price dynamics, the monthly CPI data published by Rosstat is not an
accrual of the weekly estimates.
Most analysts, including the Central Bank of Russia (CBR), currently expect deflation for the whole
month of August 2017. However, the CBR believes that in the coming months “there is a risk of
increased food inflation due to a possible decline in harvest of certain vegetables and fruits, which may
also lead to higher inflation expectations.” At the same time, the trend to bring annual inflation to the
CBR’s target level of 4 percent is still there, according to the CBR, which also stressed the need to
maintain a moderately tough monetary policy to further consolidate inflation near 4 percent and limit
inflationary risks.
Meanwhile, the Ministry of Economic Development (MED), usually the most optimistic in its CPI
forecasts among the Russian government agencies, has recently lowered the forecast for 2017 annual
inflation in Russia to 3.7 percent from 3.8 percent.
Weekly Consumer Price Changes (Percent Change from the Previous Week)
Product name
21Aug
14Aug
7Aug
31Jul
24Jul
17Jul
10Jul
Onions
-7.70
-8.00
-6.70
-3.60
-0.20
1.10
-1.20
Potatoes
-6.70
-6.10
-6.50
-7.30
-5.90
-6.60
-6.20
Cabbage
-10.20
-10.60
-1.70
0.10
0.10
-0.20
-1.00
-0.10
0.00
0.00
12.10
-1.20
0.10
0.00
0.00
14.30
-1.60
0.00
0.00
0.00
16.80
-0.50
0.20
0.00
0.10
15.50
0.40
0.10
0.10
-0.10
10.20
2.50
0.00
-0.20
-0.10
0.00
0.10
0.10
0.10
0.00
-0.10
0.00
-0.10
0.20
0.20
-0.10
0.00
-0.10
0.10
Pork
0.00
-0.10
0.00
0.20
0.10
0.10
-0.20
Wheat flour
0.00
-0.10
0.00
-0.30
0.00
-0.10
-0.10
Sugar
Chicken, chilled and
frozen
-0.80
-1.00
0.10
0.70
1.30
1.30
0.00
-0.20
-0.10
-0.20
-0.10
Sunflower oil
-0.10
0.20
0.10
-0.20
Chicken eggs
-0.80
-0.50
-0.90
Tomatoes, fresh
-7.80
-9.40
-7.50
Apples
Butter
Cheese
Pasteurized milk
Beef
Whole frozen fish
3Jul
1.30
5.20
26Jun
19Jun
Change
as of
21-Aug
Since
Decemb
er 2016,
%
0.90
1.70
50.5
0.50
4.00
46.6
4.00
12.10
13.50
36.5
3.50
0.10
0.00
0.00
3.30
0.10
0.00
0.00
29.9
7.3
2.5
2.4
0.00
0.10
1.2
0.10
0.00
1.0
-0.10
-0.10
-0.9
-0.20
0.10
-1.1
2.10
3.80
0.00
0.10
0.00
0.10
0.20
0.10
0.10
1.60
1.60
0.80
-1.6
-0.30
0.00
0.10
-0.20
0.00
-5.4
0.00
-0.10
0.00
-0.20
-0.30
-7.4
-1.20
-1.20
-1.30
-1.00
-0.80
-0.40
-24.7
-6.20
-4.70
-5.70
-2.90
-3.00
-4.10
-41.6
0.10
0.90
-
Cucumbers, fresh
1.70
-3.30
-4.90
-2.90
0.00
1.30
Source: Rosstat, Weekly CPI Estimates
Note: Selected commodities from Market Basket which are consistently reported by Rosstat.
-5.60
2.80
6.10
-3.90
-6.20
-51.6
USDA STAFF AND NOT NECESSARILY STATEMENTS OF OFFICIAL U.S. GOVERNMENT
POLICY
Voluntary
- Public
Date: 9/1/2017
GAIN Report Number: RS1749
Russian Federation
Post: Moscow
Cold Weather behind Food Prices Uptick in June 2017
Report Categories:
Agricultural Situation
Agriculture in the News
Approved By:
Deanna Ayala
Prepared By:
Staff
Report Highlights:
According to Russia’s Federal State Statistics Service (Rosstat), Russia’s headline consumer price index
(CPI) rose to 4.4 percent year-on-year in June 2017 from 3.5 percent at the end of March 2017. Food
prices drove the CPI increase, spiking to 4.8 percent year-on-year in June 2017, up from 3.5 percent at
the end of March 2017. The key factor behind the increase was inflation in the fruit and vegetables
segment fueled by reduced supply and delay of the new harvest due to the unusually cold weather in the
period. The CPI uptick in June is seen as temporary with Russia currently on track to end the year
comfortably within the 4 percent annual CPI target set by the Central Bank of Russia.
General Information:
According to the Russian Federal State Statistics Service (Rosstat), Russia’s headline consumer price
index (CPI) totaled 2.3 percent in June 2017 (since the beginning of the year), compared to 3.3 percent
registered in June 2016. The food products component of the headline CPI number1 reached 3.4 percent
at the end of June 2017, up from 3.2 percent year-to-date at the end of June 2016.
Chart 1. Food Products CPI in 2013-2017 (Percent change from December of the previous year)
Source: Rosstat
On an annualized basis, the headline inflation rate in the second quarter of 2017 rose to 4.4 percent yearon-year in June, up from the historical low 4.1 percent at the end of April and May 2017. The food
products component of the headline CPI number spiked to 4.8 percent year-on-year in June 2017, from
3.5 percent at the end of March 2017. The key factor behind the increase was inflation in the fruit and
vegetables segment where prices jumped 8.3 percent month-on-month in June 2017 fueled by reduced
supply and delay of the new harvest due to the unusually cold weather in the period.
The June CPI uptick proved to be short-lived, however, as headline inflation fell to 3.9 percent year-onyear and food prices declined one percent month-on-month in July with the start of the new harvest
supplies. Prices fell 0.1 percent on a weekly2 basis for three weeks in a row through August 14 and
came in flat the week ending August 21. Weekly declines of prices for fruit and vegetables in the range
between 3.6 and 3.9 percent were the main driver behind the deflation. For more details on weekly food
price movements reported by Rosstat please see the table below.
1
According to Rosstat, in 2017, the weight of food products in the structure of its headline monthly CPI number is 38.08
percent, while the share of non-food items is 35.67 percent and services account for the remaining 26.25 percent of the total
CPI.
2
Weekly price changes are registered by Rosstat every Monday for select items in three categories - food, non-food, and
services, in 275 cities across Russia. Such weekly monitoring results feed into the calculation of the weekly CPI estimates
published by Rosstat every Wednesday. However, as Rosstat explained in its August 2014 presentation, while its weekly
CPI estimates reflect the general trend of consumer price dynamics, the monthly CPI data published by Rosstat is not an
accrual of the weekly estimates.
Most analysts, including the Central Bank of Russia (CBR), currently expect deflation for the whole
month of August 2017. However, the CBR believes that in the coming months “there is a risk of
increased food inflation due to a possible decline in harvest of certain vegetables and fruits, which may
also lead to higher inflation expectations.” At the same time, the trend to bring annual inflation to the
CBR’s target level of 4 percent is still there, according to the CBR, which also stressed the need to
maintain a moderately tough monetary policy to further consolidate inflation near 4 percent and limit
inflationary risks.
Meanwhile, the Ministry of Economic Development (MED), usually the most optimistic in its CPI
forecasts among the Russian government agencies, has recently lowered the forecast for 2017 annual
inflation in Russia to 3.7 percent from 3.8 percent.
Weekly Consumer Price Changes (Percent Change from the Previous Week)
Product name
21Aug
14Aug
7Aug
31Jul
24Jul
17Jul
10Jul
Onions
-7.70
-8.00
-6.70
-3.60
-0.20
1.10
-1.20
Potatoes
-6.70
-6.10
-6.50
-7.30
-5.90
-6.60
-6.20
Cabbage
-10.20
-10.60
-1.70
0.10
0.10
-0.20
-1.00
-0.10
0.00
0.00
12.10
-1.20
0.10
0.00
0.00
14.30
-1.60
0.00
0.00
0.00
16.80
-0.50
0.20
0.00
0.10
15.50
0.40
0.10
0.10
-0.10
10.20
2.50
0.00
-0.20
-0.10
0.00
0.10
0.10
0.10
0.00
-0.10
0.00
-0.10
0.20
0.20
-0.10
0.00
-0.10
0.10
Pork
0.00
-0.10
0.00
0.20
0.10
0.10
-0.20
Wheat flour
0.00
-0.10
0.00
-0.30
0.00
-0.10
-0.10
Sugar
Chicken, chilled and
frozen
-0.80
-1.00
0.10
0.70
1.30
1.30
0.00
-0.20
-0.10
-0.20
-0.10
Sunflower oil
-0.10
0.20
0.10
-0.20
Chicken eggs
-0.80
-0.50
-0.90
Tomatoes, fresh
-7.80
-9.40
-7.50
Apples
Butter
Cheese
Pasteurized milk
Beef
Whole frozen fish
3Jul
1.30
5.20
26Jun
19Jun
Change
as of
21-Aug
Since
Decemb
er 2016,
%
0.90
1.70
50.5
0.50
4.00
46.6
4.00
12.10
13.50
36.5
3.50
0.10
0.00
0.00
3.30
0.10
0.00
0.00
29.9
7.3
2.5
2.4
0.00
0.10
1.2
0.10
0.00
1.0
-0.10
-0.10
-0.9
-0.20
0.10
-1.1
2.10
3.80
0.00
0.10
0.00
0.10
0.20
0.10
0.10
1.60
1.60
0.80
-1.6
-0.30
0.00
0.10
-0.20
0.00
-5.4
0.00
-0.10
0.00
-0.20
-0.30
-7.4
-1.20
-1.20
-1.30
-1.00
-0.80
-0.40
-24.7
-6.20
-4.70
-5.70
-2.90
-3.00
-4.10
-41.6
0.10
0.90
-
Cucumbers, fresh
1.70
-3.30
-4.90
-2.90
0.00
1.30
Source: Rosstat, Weekly CPI Estimates
Note: Selected commodities from Market Basket which are consistently reported by Rosstat.
-5.60
2.80
6.10
-3.90
-6.20
-51.6