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HomeLatest NewsVladimir Putin predicted a sensational drop in inflation to 5%. And...

Vladimir Putin predicted a sensational drop in inflation to 5%. And that’s why

Date: May 31, 2023 Time: 22:32:36

Economist Kolganov explains why Putin’s 5% inflation forecast is realistic


– Inflation was lower than expected. And it has, what is more important, a downward trend. According to the results of the first quarter of 2023, inflation could decrease from 11.9% to approximately 5%, the president said in an interview with journalist Pavel Zarubin in the latest edition of Moscow. Kremlin. Putin”.

The 11.9% figure is the Rosstat data: this is how the agency estimated inflation at the end of 2022. And this is not so bad: in the spring of 2022, the experts gave us much more terrible numbers. But isn’t inflation falling to 5% per year too bold a forecast?

We answer immediately: in the current conditions, this is quite real. And that’s why.

There is a concept in the clever art of statistics called the low base effect. This is when the impressive growth rate of some indicator is explained by a very weak starting point.

Here is an example for you. In 2021, real disposable income (salaries minus inflation, loans and other mandatory payments) in the country grew by up to 3.1%. Fresh? Not really. After all, the indicator is growing not just like that, but in comparison with the previous (base) period. And the year before, actual revenue plummeted 2%. That’s why the growth was so strong: the starting point was too low.

Now let’s go back to the first quarter of 2022. Last March, prices rose as much as 16.7% (compared to March 2021). This is the weakest starting point.

– The previous rise in inflation (in the early spring of 2022, – Ed.) was caused by extraordinary circumstances, when the ruble was greatly weakened against the background of the massive imposition of sanctions. This led to a significant increase in the price of imported goods. This was the main factor that caused the rise in inflation, explained on the radio “KP” Andrey Kolganov, head of the laboratory for the comparative study of socio-economic systems at the Faculty of Economics of Lomonosov Moscow State University. . – And then this factor stopped working. The ruble has strengthened a lot. The situation has stabilized. At some periods of time (last summer and autumn, – Ed.), our inflation was even negative – this is due to the fall in prices for agricultural products. Therefore, we have no prerequisites for higher inflation growth.

So in March 2023, prices just can’t go as high as they did early last spring. Now there is no reason for this. And what exactly the inflation will be and whether it will be 5%, time will tell. and Rostat.

Puck Henry
Puck Henry
Puck Henry is an editor for ePrimefeed covering all types of news.

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