Warm season: what does it mean for the Russian economy the first two years, the decline in prices for goods and pluricanonical link
Rosstat three times per month recorded a week-long deflation. Thus, in Russia for the first time in 2017, there is a decrease in consumer prices. In an expert community is allowed deceleration of inflation end of 2019, below the Central Bank target of 4%. In this regard, analysts predict two more reduction of the key rate of the Central Bank, followed by state and private banks will gradually reduce mortgage rates.
- © Alexander Natruskin
Official statistics in Russia shows the reduction in the price of goods and services. In Economics this phenomenon is called deflation — in our country it marked the first time in two years.
According to Rosstat, from 23 to 29 July, the average level of consumer prices fell by 0.1%, from 30 July to 5 August has not changed, and in two weeks, from 6 to 19 August, the index fell by another 0.2%.
In conversation with RT the head of a group of analysts CAPT mark Goikhman tied the overall decline in prices from the early harvest.
According to experts, three weeks of August, most notably reduced the cost of potatoes, carrots, tomatoes, sugar, milk, flour and pork. And this situation may continue at least until the end of September.
In conversation with RT the head of the analytical Department AMarkets Artem Deev added that in the second half of summer and in early autumn the Russians seek to provide winter supplies. For this reason closer to the beginning of winter and the New year’s eve prices traditionally start to rise.
According to the Central Bank survey on the General decline of inflation in the country and influenced the stabilization of fuel prices. At the end of the year, the Central Bank predicts inflation close to 4,2—4,7%. The return of the indicator to the target of 4% is expected by the beginning of 2020. However, the Director of the analytical Department of «Loco-invest» Cyril Tremasov considers that by the end of 2019, the value will be close to 3.7% to 3.8%.
A similar assessment is shared by the Ministry of economic development, which in its latest forecast the expected annual inflation rate of 4.3%. But the head of the Ministry Maxim Oreshkin does not rule out the revision rate to below 4%, according to TASS.
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Moderate growth of prices will become the reason for the Bank of Russia once again to reduce the interest rate. Kirill Tremasov believes that the likelihood of such a decision at the September meeting, the Central Bank is close to 100%. Further actions the Bank of Russia will also depend on not yet presented the budget parameters for the year 2020 and projected costs of the national welfare Fund (NWF).
RT interviewed experts predict two rate cuts of the Central Bank until the end of 2019 due to the General macroeconomic stability in the country. A possible fall in world oil prices in the future threaten the execution of the Federal budget. At the same time record the volume of foreign exchange reserves exceeds the external debt of the country and allow Russia to be independent from creditors and to timely pay the obligations.
«If oil prices return to the corridor of $50-60, the risks to the budget are missing. Thus today, the volume of Russia’s international reserves more than twice the current needs of the state,» said RT’s head of operations on the Russian stock market IR «freedom Finance» George Vashchenko.
As analysts explain, a rate cut is needed to stimulate business activity and economic growth in General. In the long term this measure will lead to cheaper loans, increase domestic demand and investment.
The change rate of the Central Bank is reflected most notably in the mortgage market. In Russia, the average interest rate on housing loans has already started to decline. From may to July it decreased from 10.58% to 10.28% per annum. Anton Pokatovich by the fall predicts the achievement of a range of 9.5 to 9.7 per cent.
«Given the two cuts in the key rate, which the Central Bank implemented in the summer, we expect that the fall in mortgage rates will tend to levels of 9.5—9.7% and can also pursue more active reduction of the end of the year if the Central Bank and will go further towards reducing rates,» said Anton Pokatovich.
In late February, President Vladimir Putin officially instructed the government and Central Bank to take measures to reduce mortgage rates to at least 8%. In the Central Bank consider it possible to complete the task by 2024. Recently stated by Elvira Nabiullina.
About the same scenario laid out in the national project «Housing and the urban environment». The program assumes that the interest on housing loan will decrease to 8.9% in 2019, and then to 8.5% in 2021-m and 7.9% in 2024-m.
Mark Goikhman said that the rate cut not only makes housing affordable, but also leads to a reduction in overdue debts on loans. Therefore, the implementation of the national project will weaken the debt burden on citizens and have a positive impact on the operation of banks.
«Over the past year, the growth rate of overdue debt on mortgages decreased by 9.6% and as of 1 July was only 0.9%. Further reduction in rates could further stabilize the situation in the property market,» concluded mark in real.