At the last meeting of the Bank of Russia for the sixth time in a row left the rate unchanged, referring in particular to the negative impact of wage growth on inflation.
Fears really had a ground, because in February and March, the inflation-corrected salaries of Russians showed growth for the first time since 2014 But now it seems that the point of view of the Bank of Russia will be revised as we received the latest figures on income and these data were disappointing.
Real disposable monetary incomes of the population decreased in April by 7.1%. Moreover, according to the revised data, in March a decline of 1.2% in February to 4.5% in January to 5.5%.
It should be noted that the decline occurred became one of the strongest in the last 8 years. Worse, it was only in December 2008 (a decrease of 10.8%), in August 2009 (a decrease of 8.2%) and December 2014 (-7,6%).
If to speak directly about wage growth, they are in April again showed a growth of 5.4%, but this figure is clearly below inflation, so in real terms wages fell by 1.7%.
Recall that the growth of nominal wages in annual terms in February reached 8.7% and 9% in March, and this growth has exceeded inflation. However, as we can see, the trend was unsustainable, and in April saw a decline. Moreover, according to the forecast of Ministry of economic development, to the end of the year, real salaries will fall by 1.5%.
In General, it can be noted that CBR found not the most convincing reason not to lower the rate, although representatives of the real sector of the economy waiting for this moment for quite some time.
Even despite the recent acceleration of wages, retail sales remain weak. The drop rate decelerated in April, but still amounted to 5%, and in March, we will remind, it has reached 5%.
However, the Central Bank may find new reasons not to lower the rate. Now the controller is waiting for the temporary growth of inflation, and so it was possible to predict a few months ago.
“In may-June of the current year, as expected, monthly growth of consumer prices will remain low. However, given the low base of comparison, it is not excluded a temporary increase in the annual inflation rate. In July its decline will resume.”
Basically, the growth rate will be driven by the base effect, but then the inflation resumed.
The CBR also noted the rising prices of gasoline and transport services, which in General, is not surprising. That was evident at the end of winter, when it became known about the second increase in excise duty. We and other experts have noted that this moment will inevitably affect the level of inflation and to fight it by monetary means is meaningless.
It was noted that the cost of gasoline affects the cost of virtually all goods in the consumer basket, as it affects the cost of logistics. It is clear to anyone – even a novice – the economist
