Will deflation replace inflation in Russia?
The effect of the devaluation of the ruble has exhausted itself. This is confirmed by the decrease in the average daily rate of inflation from 0,031% in January to 0.021% in February this year, the report Sberbank CIB analysts reports.
"We believe that the effect of the devaluation of the ruble has already exhausted itself and it will cease to be felt in the near future. Our view is supported by the deflation in important segments of the food products in February," the document says. It notes that the exchange rate is close to equilibrium now, but experts believe that this state is unstable due to the high conservation of inflation in comparison with the level of development of the country. In the case of a new rise in oil prices, Sberbank CIB experts predict a new appreciation of the ruble. According to them, the level of inflation will be about 8% this year.
According to the report, in general the Russian economy has adapted to the current level of oil prices: "... the economy seems to be adapted to the price of oil at the level of $30-35 a barrel, and you can expect a positive trend of GDP already in 2017. If the average oil price for the year doesn't not fall below $30 a barrel in the second half of the year, a recovery in domestic demand may even start,'' RBC cites the document.
At the same time, analysts of VTsIOM believe that the consumer moods in Russian show dangers of hitting the country's economy into a deflationary trap: for the first time, a significant number of Russians have begun to believe it is better to spend as little as possible and not to borrow money, as well as take money from banks.
"For the first time during a long period of observation all the indicators have deteriorated. It is a factor, which is called by Keynes the "liquidity preference". Russians still prefer not to spend money, spending it only in the most urgent necessity. It leads to compression of effective demand and a slowdown of the rate of turnover of money in the economy,'' VTsIOM expert Oleg Chernozub said, explaining the so-called "liquidity preference" as a factor that signals the formation of deflationary risks in the economy.
Professor of the finance, money circulation and credit department at RANHiGS Yuri Yudenkov said in an interview with a correspondent of Vestnik Kavkaza that the current situation seems strange to him at least.
"Frankly speaking, I don't see any termination of the effect of devaluation in respect of inflation in Russia. On the contrary, the devaluation has an impact on inflation. Let's fix what can be fixed for sure.. Firstly, I would not speak of exhaustion, because in this case we cannot conduct tight liaisons. We can see a decline in inflation by two parameters: the Central Bank tried hard to suppress key rate loans and it managed to succeed in suppress of inflation it with the help of the mechanism of the compression of the loan volume of the of the Central Bank. It is a sufficiently rigid monetary policy,'' the expert said.