In August 2011 consumer costs have deflated 0.2% for the first time in the last 6 years. This fact has decreased the index of annual inflation to 8.2%. The August deflation has become a suddenness for the money authorities and for the most part of analysts, that had forecasted the zero variation of prices in August and had expected the deflation in September .
The main reason is the landslide of prices for fruit and vegetables (16%). At the same time the average food prices have fallen in 1.4%. Prices for non-food goods and services have slightly increased: 0.5% and 0.3% respectively. However, some fundamental factors, such as retardation of economic growth and money supply, have influenced the reduction of inflation. If there won’t be any internal or external shocks, these factors will impose the tendency of the reduction of inflation.
There are not so many risks for the accelerating inflation in the medium-term perspective. The most important ones are increasing pre-election expenditures and large liquidity injecting to the Russian banking sector (in case of aggravation of problems in the banking sector of the European Community).
At the moment analysts are decreasing their inflationary forecasts for the year 2011 from 8% to 7.5%.
Source: www.kommersant.ru