Why the ruble is getting stronger and goods are not getting cheaper

No one expected that in the conditions of economic blockade the ruble could surrender the dollar at all. And yet he is getting stronger! But here for the state and it is insulting: what day in the conditions of severe sanctions the domestic currency grows, and the prices for the goods do not think to decrease.

– What is being done? The average housewife asks. – Domestic potatoes from old stocks yesterday cost 50 rubles per kilogram, today – 62. Young Egyptian, respectively, was 100, now 110 rubles. Cabbage head, or rather, a kilogram, scary to say – 150 rubles…

In fairness, it should be noted that there is good news in the consumer market. So, from thousands of goods, good and different, news agencies report a drop in the price of three: office paper – by 30%, baby formula – by 15%, sanitary pads – by 12%.

In everything else, probably, the situation is as it was reported by our reader. Unless the greenhouse cucumbers seasonally fell by 6%. Also a trifle, but nice.

But in general… When the ruble collapsed in mid-February from 73 to 120 per dollar, price tags in stores were rewritten the next day, everything jumped by 30 percent. It cost, say, a product of 100 dollars, for which they paid 7,300 rubles. And then it began to cost 12,000 rubles.

Now the “wooden” has almost regained its pre-crisis position (84.09 per dollar and 93.7 per euro), but the dynamics of food prices is about the same as for potatoes and cabbage. Everything is getting more expensive…

Is there a clear economic calculation of prices? Any economist will say that there are, and that current prices in Russia, in addition to the dollar, are influenced by a thousand and one different factors. In particular, the availability of goods on the shelf. The smaller the offer, the more expensive it is. And today we can only dream of availability, assortment in many positions. Customs and border barriers, refusal of some companies to import, difficulties of logistics and mutual settlements…

– The fact that the ruble is gaining ground today is very important for citizens, said Nikita Maslennikov, a leading expert at the Center for Political Technologies. – We have sharply reduced the effect of transferring the weakening of the ruble exchange rate to domestic prices. So I can’t agree that they are just doing what is growing. For some groups of goods and are reduced.

Inflation in fruit and vegetable products last week was 3.83%, and now 2.7%. There is a certain connection with the strengthening of the ruble, although weak

In March, the ruble strengthened against the dollar by 29% and against the euro by 26.5%. As for inflation, its weekly pace lost more than one percentage point, the average daily inflation was 0.33%, now 0.25. Inflation dynamics is noticeably weakening.

– During all economic reforms, prices in Russia are not falling, only rising. Our fellow citizens are convinced of this.

– I do not agree. Before the covid epidemic, we had low inflation, about 4%. The rise in prices, not only in Russia but all over the world, was the result of a coronavirus pandemic. I will not say that it is forever, for the rest of my life. We need to be patient. There are changes for the better even in this very difficult period.

– Will our ruble win back its positions – will we live as before?

– Today, the ruble is strengthening for many reasons: the sale of foreign exchange earnings by exporters, control over capital outflows, gas trading for rubles… Plus the tax period when the ruble is especially in demand. Thus, it tends to strengthen.

What will happen next? Sooner or later we will return to normal life. As the special military operation ends and sanctions are lifted, we will have to “loosen the nuts”: tighten controls on capital outflows, ease restrictions on the mandatory sale of foreign exchange earnings. Today it is profitable for us to trade in gas for rubles. But tomorrow we will feel a reduction in the inflow of currency, including for import purchases.

In short, the prospect of endless strengthening of the ruble remains questionable. I think in the coming months the ruble exchange rate will fluctuate between 80-100 rubles per dollar. The government’s task is to smooth out volatility, but this is the next step. Currency risks cannot be removed from the agenda.

Published in the newspaper “Moscow Komsomolets” №28755 dated April 1, 2022

Newspaper headline:
In anticipation of the spring price drop


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