Hello! In this article we will understand the concept of "index" consumer prices».

Today you will learn:

1. What is the CPI, who calculates it and how;
2. Where is the index used?
3. How to find out the current CPI.

Consumer price index in Russia 2019

How are things going with the price index in our country at the beginning of 2019?

According to official data from Rosstat,In February 2019, the overall CPI was 100.4%, including for goods – 100.5%, for services – 100.2%, since the beginning of 2019 – 101.0%.

As an example, let’s look at how the composite index changed in the Russian Federation from 2014 to 2018.

Data not only by year, but also by month is publicly available on the Federal Service website state statistics. You can view the history of values ​​from 1991 to the current month, not only relative to the previous year, but also to the last month.

It's no secret that statistical offices around the world regularly produce a lot of calculations and studies. Some of them are so important that they can determine the direction of domestic and foreign policy and become guidelines for financial institutions and the largest enterprises.

What is the consumer price index

One of these important parameters is the consumer price index, and in English-speaking countries CPI is the percentage ratio of prices for goods and services at the beginning and end of the billing period.

This indicator illustrates jumps in the average price schedule relative to the base year, and, accordingly, changes in the cost and standard of living.

In Russia, the CPI is calculated and published monthly federal Service state statistics.

Not all goods are indexed, but most retail trade is. In total, the list includes more than 100,000 items.

Core consumer price index

The part of the CPI, for the calculation of which price fluctuations due to situational influences are excluded, is usually called the base one.

The purpose of the base index is to identify price dynamics without the influence of supply and demand shocks, seasonality, and local legislative regulation.

For example, to calculate the BICP, the following are excluded from the consumer basket:

Where is the consumer price index used?

The consumer price index is a very important and informative indicator.

Based on the CPI value, it is easy to understand how citizens’ expenses have changed, provided that the list of purchased goods remains the same.

For example, it is on the basis of the price change index that decisions are made on the recalculation of social payments, wages and so on.

CPI influences interest rates on loans and credits, on the refinancing rate, on the cost of bonds. Traders actively monitor the CPI, as they can be used to predict Central Bank rates and the strengthening or weakening of the currency.

Monthly index values ​​ultimately affect exchange rates, since it can be used to determine the purchasing power of the population and predict government policy.

Impact of the CPI on inflation

The consumer price growth index reflects the dynamics of the cost of living of citizens, so it is indispensable when calculating inflation.

Other advantages of the CPI relative to other financial indicators:

• Simple index calculation methodology;
• Monthly construction;
• Timely and accessible publications.

If the index grows, it means that the cost of the consumer basket increases relative to the base value. An index that has reached 100% or more indicates inflation in the country, and as a result, a tightening of monetary policy.

A drop in prices relative to last year indicates deflation, which poses a separate danger for the country’s economy. The Central Bank immediately reacts to this phenomenon by lowering interest rates.

Calculation of the consumer price index

The Consumer Price Index is a percentage of how much cheaper or more expensive certain products have become.

Accordingly, the formula looks like this:

Current value of the consumer basket / Value of the basket at the beginning of the period (or in the base year) * 100.

The components of the consumer basket change in step with progress ( cellular entered there relatively recently), and this also has an impact on the final CPI. Therefore, it is not always possible to objectively compare values ​​from long ago.

The complete list is approved by Federal Law.

Here are some of its component categories:

• Food;
• Cloth;
• Cost of housing and communal services;
• Commercial education;
• Paid healthcare and so on.

Calculation example. Let's assume that the consumer basket of food products includes only bread, milk and butter (in fact, the full working list consists of several thousand items).

Their common current value 165 rubles. In December of the previous year they cost 160 rubles.

The annual CPI will be equal to: 165 / 160 * 100 = 103,1.

We have an index of more than 100, which indicates a tendency towards inflation.

CPI and GDP deflator

The deflator and the CPI have common task– they are used to calculate inflation in the country. But otherwise, these indicators have noticeable differences.

Consumer Price Index (CPI - Consumer Price Index) - an indicator of rising prices for goods and services.

This is the most popular formula for determining inflation/deflation. The CPI is a weighted average of the prices of goods and services purchased by the average household.

When determining CPI, the so-called statistical shopping basket is taken into account. Its content is determined by the statistics department and approved by state level. The consumer price index is calculated using the formula:

• Kr is the cost of the market basket for a certain year;
• Kb is the value of the market basket at the time of calculation.

The Consumer Price Index is measured in almost every country, but the calculation methods differ. In poor countries, residents spend a significant portion of their income on food, and this has a significant impact on the CPI. On the contrary, in high developed countries differences in consumption patterns lead to the need to develop our own calculation scheme. For example, in the Japanese price index, fish is weighted more heavily, while in the French price index, wine consumption is weighted more heavily.

Basket contents

The basket consists of various product groups, which cover about 400 items. It represents the shopping mix of a typical consumer. The list includes food, fuel, clothing, real estate, medical and legal services, expenses for public transport, repairs, interest on loans, etc.

The consumer price index is very important for the economy. It appears as:

• inflation rate;
• measure purchasing power money;
• part of the formula for calculating wage indexation (cost of living adjustment);
• indicator for coordinating monetary and fiscal policies.

The price index for consumer goods and services is one of the most important indicators fundamental (macroeconomic) analysis. IN monetary policy it is used by countries where central bank applies a direct inflation targeting strategy. There are also other indicators that determine price stability in the economy, for example, the deflator gross product. However, from the studies conducted it follows that the CPI more fully diagnoses inflation compared to other calculation methods.

Problems detecting changes in CPI

To more accurately calculate the CPI, the following factors should be taken into account when calculating:

• The emergence of new products. This means more choice for consumers. Greater variety of products increases the value of money. This means people need less financial resources to maintain your current standard of living. However, the price index is based on a fixed basket of goods and services, so it does not reflect changes in the purchasing power of money.
• Substitution of goods. Product prices vary to varying degrees. Some decline more, others decrease, and others increase. Consumer demand due to such price elasticity may vary, as the buyer limits the purchase of goods that have become more expensive and increases the purchase of cheaper items. If the CPI is calculated for a fixed basket, it does not take into account the fact that consumers may buy substitute goods.
• No change in quality. Deterioration in the quality of goods leads to a fall in the purchasing power of money, even if the price of the product has not changed. Likewise, as a product improves, the cost of finance increases.

Another challenge in calculating the CPI is making comparisons over the long term. The problem stems from the fact that many goods and services present in the current basket did not exist in the past (for example, microwave ovens, Cell phones etc.). Some product items (for example, computers) are included in the list, but the statistics do not take into account that the equipment currently being produced differs from its previous generations, which may affect its cost. Also, the accuracy of calculations can be affected by the so-called inflation inequality - the difference in the share of individual goods and services in the structure of expenses of different social groups.

The rate of increase or decrease in the standard of living of the population due to changes in the level of cash income and expenses can be correctly assessed only taking into account changes in the price level in the consumer market. Since January 1992, price information on the consumer market has been collected throughout Russia and consumer price indices for goods and services (CPI) have been calculated - one of the most important indicators of social economic development countries. Based on the CPI, the government adjusts domestic policy in the field of finance, money circulation, indexes the incomes of various social groups of the population, estimates the level and rate of inflation, etc.

The CPI characterizes the change over time in the general level of prices for goods and services purchased by the population for non-productive consumption. It is defined as the ratio of the cost of a fixed set of goods and services in the current period to its cost in the previous (base) period.

The consumer set of goods and services for which prices are recorded consists of three groups, covering food products, non-food products and paid services. The number of positions in each group is formed based on the importance of representative products and the stability of availability for sale in order to ensure representativeness and comparability of price information.

In addition to goods and services of mass consumer demand, the set also includes goods and services of optional demand: cars, gold jewelry, alcoholic beverages, etc.

Registration of prices and tariffs is carried out for a sample of cities and other settlements, selected taking into account their representativeness in reflecting the socio-economic and geographical location and the degree of saturation of the consumer market with goods. Price monitoring is carried out in the consumer market only in urban areas. This is due to the fact that price registration in rural areas is impractical, as it requires a significant increase in material and labor costs and is associated with great difficulties. In addition, as calculations show, the dynamics of consumer prices in rural areas is not much different from the dynamics of prices in the city.

Prices for a fixed set of goods and services are recorded weekly only in large cities, and for all selected localities - monthly from the 23rd to the 25th. In addition to the entire range of goods and services, there is a minimum set of essential food products. Prices for these products are recorded weekly in Moscow and St. Petersburg, the capitals of the republics of Russian Federation, regional, regional cities and centers of autonomous districts.

Note that the cost of the minimum set of food products reflects the interregional differentiation of consumer prices and is not a component of the subsistence level, since when calculating the cost of this set, uniform minimum volumes of consumption for the Russian Federation as a whole are used.

Registered prices for goods and services in the consumer market are prices of actual sales, taking into account VAT, excise taxes and other indirect taxes.

Price information is collected at trade and service enterprises of all types of ownership and forms of trade organization, as well as in places where goods (services) are sold to individuals.

Rosstat calculates several consumer price indices: a consolidated CPI for the full fixed set of goods and services and for the same set without non-essential goods; CPI for certain socio-economic groups of the population with different income levels (10 decile groups of families); cost of living index at the regional and federal levels; summary price indices in general for groups of food, non-food goods and paid services.

In addition to information on prices, to calculate the CPI, information is used on the structure of actual consumer expenditures of the population for the previous year, which is calculated on the basis of indicators sample survey households.

The procedure for calculating the CPI is as follows. First, individual price indices of goods (services) for a city or region are determined:

Here and are the average comparable prices of the reporting and previous period (month), calculated for a specific product (service) using the simple arithmetic average formula:

where is the sum of registered prices in different retail outlets; P – number of registered points.

A price registered in the same trade enterprise (service sector) for the same or similar quality product (service) is considered comparable.

Based on individual price indices for the cities participating in the observation and territorial weights, aggregate price indices of individual goods, product groups and services for the region as a whole are determined, economic region, Russian Federation. As territorial weights, data on the share of the population of the surveyed territory in total number population of Russia at the beginning of the year.

Next, based on aggregate indices for goods and services as a whole for the region, economic region, the Russian Federation and the share of expenses for their purchase in consumer expenditures of the population, aggregate price indices are determined as a whole for groups of food, non-food goods and services, as well as CPI for region, economic region, Russian Federation as a whole.

The modified Laspeyres formula is used as a formula for calculating the consolidated CPI:

where and is the price of goods y in basic and n -th periods; - quantity of goods j in the base period; – costs of goods in the base period.

The CPI is calculated monthly to the previous month, to the corresponding month of the previous year and December of the previous year, as well as on a cumulative basis from the beginning of the year to the corresponding period of the previous year. To obtain the CPI for long periods while maintaining the characteristics of these goods (for a quarter, half a year, period from the beginning of the year), the chain method is used, i.e. method of multiplying monthly (quarterly) CPI. Thus, the CPI is calculated by sequentially aggregating data. First, product indices are determined, covering all types of trade, and then indices by product groups and, finally, a consolidated CPI is constructed.

One of the disadvantages of the CPI using the Laspeyres method is the use of the structure of consumer expenditures of the population for the base period as weights. In conditions of economic instability, the structure of such expenses inevitably changes (Table 25.8).

Table 25.8

Structure of consumer expenditures of Russian households in 2007-2011 (% of total)

Indicators
Consumer spending – total
including by consumption purposes: food and non-alcoholic drinks
Food
alcoholic drinks, tobacco products
clothes and shoes
housing services, water, electricity, gas and other fuels
household items, household appliances and home care
healthcare
transport
organization of recreation and cultural events
education
hotels, cafes and restaurants
of which catering
other goods and services

Source: Russian statistical yearbook. 2012: stat. Sat. ∕ Rosstat. M., 2012. P. 199.

When calculating the CPI, due to the fact that the structure of household consumer spending changes throughout the year, the average annual weights are usually adjusted to bring the basic consumer basket as close as possible to the conditions of the current period.

Let us show the calculation of the CPI using a simplified scheme using the example of a homogeneous product group. Let us assume that as a result of observation there is information on average comparable prices for goods in five administrative districts of a large city (Table 25.9).

The average change in prices for poultry meat in the city as a whole can be determined by calculating weighted average indices. For example, the price index for January – December was

The same result can be approached by comparing weighted average prices for the city as a whole. They are calculated in the final row of the table. 25.9 gr. 2–5 according to the formula:

Table 25.9

Calculation of the weighted average price and price index for a homogeneous product group

S		Price per 1 kg, rub.				Individual price indices
		December of the previous year (/I0)	this year
				(P2)	March ( RZ)
Total for the city

Let us also assume that for other goods of the same consumer group the following results of price indices for January – December were obtained for the city: product A – 1.042 (2.5%); product B – 1.062 (1.8%); product B – 1.035 (12.0%); product G (semi-finished products) – 1,060 (1.1%); product D – 1.022 (2.0%); product E – 1.015 (2.0%). Indicated in parentheses specific gravity in consumer expenditures of the population, which in general for the analyzed group of goods in the base year amounted to 27.2% of all expenditures of the population on the purchase of food, non-food goods and services.

Hence, the consolidated CPI for meat and meat products, for example, in January relative to December of the previous year will be

those. prices in January increased by an average of 3.8% compared to December.

Price indices in gr. 9 tables 25.9 can be obtained using the chain method (for example, the resulting line is: 1.046 1.017 x 1.035 = 1.101).

The CPI system calculates a monthly cost of living index, or, as it is called, a “cost of living” index. The cost of living (physiological) minimum is the cost of a set of basic food products that corresponds minimum sizes consumption according to the standards of the Institute of Nutrition of the Academy of Medical Sciences of the Russian Federation. When calculating the cost of this set, consumption volumes are used, formed on the basis of zoning of the constituent entities of the Russian Federation (eight territorial zones are distinguished) depending on factors influencing the characteristics of food consumption. Such factors include natural and climatic conditions, gender and age composition of the population, size and structure of families, nature of settlement, level of economic development, national traditions, etc.

The choice of the list of basic food products PM is also related to the availability of these products for free sale throughout Russia. In turn, this condition allows us to reasonably analyze the dynamics of the cost of PM. It is calculated not only on average per capita, but also separately for its various categories: the working population, children and pensioners.

From the data given in table. 25.10, it follows that the cost of PM increases annually, reflecting the general trend of increasing prices for food products.

Table 25.10

working population

pensioners

Source. Russian statistical yearbook. 2012: stat. Sat. / Rosstat. M., 2012. P. 199.

Regional analysis of the dynamics of the cost of living wage in parallel with the dynamics Money population makes it possible to assess changes not only in the level of consumer prices, but also in the standard of living of the population of various constituent entities of the Russian Federation.

• Since 2000, the methodology for calculating the PM value has been changed; an assessment is provided based on data established by the Government of the Russian Federation for the 1st–4th quarters of the corresponding year.
• For 2005–2010 indicators were calculated using the population recalculated taking into account the results of the 2010 All-Russian Population Census.
• Based on Federal Law No. 134-Φ3 of October 24, 1997 “On the subsistence level in the Russian Federation,” the composition of the consumer basket for determining the subsistence minimum has been changed since 2005. As a result of the revision of the composition of the consumer basket, the value of the subsistence minimum increased by 7%, while for pensioners it increased by 13%, for the working-age population and children - by 5%.

The Consumer Price Index is an important indicator for investors and traders around the world. In this article, we will clarify the relationship of this indicator with inflation, rates, exchange rates, as well as its impact on various investment instruments and assets.

What is the consumer price index and why is it measured?

I've been running this blog for over 6 years. All this time, I regularly publish reports on the results of my investments. Now the public investment portfolio is more than 1,000,000 rubles.

Especially for readers, I developed the Lazy Investor Course, in which I showed step by step how to put your personal finances in order and effectively invest your savings in dozens of assets. I recommend that every reader complete at least the first week of training (it's free).

Consumer price index ( Consumer Price Index, CPI) is an indicator of changes in the cost of the consumer basket published monthly by Rosstat. The calculation basis is the price in a certain period in the past. Another name is index.

Such data first began to be tracked simultaneously with the advent of statistics - back in the 19th century. The first prototypes were the Lowe, Paasche and Laspeyres indices, which at different times arrived at similar formulas. The basis was taken as the prices of a set of goods in the base period and the cost of the same goods, but in the reporting period. It’s simple: how much more expensive or cheaper a set of goods has become due to price changes.

In 1925, at the international level, for the first time, it was decided to collect and summarize according to uniform standards the degree of prices, inflation and quality of life in different countries. Since then, the methods have been repeatedly transformed following the change in the consumption structure of mankind. The methodology and filling of the consumer basket differ from country to country. But a single principle remains, which allows investors and traders around the world to focus on generally accepted indicators.

Today Consumer Price Index (CPI) – this is a weighted average of different items of consumer spending, grouped into categories: food, clothing, public utilities, household appliances and so on. Each category consists of dozens of positions and is also calculated on a weighted average basis. Similar methods for determining the price index based on a conditional basket of goods and services have been adopted throughout the world.

In countries with stable economies, where there are no galloping surges in inflation, the basic indicator can not be changed for decades. For example, in the United States, the Federal Reserve System has been calculating the personal consumption expenditure (PCE) index since 1986.

The price level is fixed at the same retail outlets in all regions of the country, that is, at the final link of actual consumption. IN last years data collection and processing are facilitated by the use of online cash registers, barcodes and QR codes. The measurement results are analyzed by mathematical algorithms and published by Rosstat:

Not all goods and services existing on the market are included in the consumption basket, but they also amount to hundreds of items. There are 11 groups, the composition of which is accepted as federal law. According to Law 44-FZ “On the consumer basket as a whole for the Russian Federation” of 2012, the basket is established at least once every 5 years.

Official consumer price indices from 1991 to 2018 for all groups of goods and services can be viewed and downloaded on the portal: Calculations are also posted there. There is a personal inflation calculator on the Rosstat website (registration in the service is required). There you can calculate your personal consumption in relation to your region and find out how much it has risen in price. is applied there.

How is the consumer price index calculated?

The methodology for calculating the indicator highlights the basic consumer price index (BICP or “core”, Core CPI), from which fruits and vegetables, housing and communal services, fuel and public transport are excluded. The reason for this is seasonality or exposure administrative regulation. Under normal conditions of economic development, the CPI should correlate with the basic core and another important indicator - the industrial price index (PPI).

When calculating, the current cost of the consumer basket is taken, divided by its original cost, and the result of the action is multiplied by 100%. This shows how much the prices of goods and services in the base period have risen or fallen over reporting period. An annual index exceeding 100% is a tendency towards inflation, below 100% – towards deflation (the worst phenomenon for anyone).

If you use the simple formula " current prices minus the prices of the base period" is straightforward, this will lead to large distortions. Statistics will say one thing, but in the life of an ordinary consumer everything will look different. The distorted result does not take into account the weight of the categories included in the basket. These indicators change over time. For example, there are goods and services that were not in the basket until relatively recently: cellular communications, the Internet, paid healthcare and education, etc. also shift priorities in favor of essential goods and services: mainly housing and communal services, medicines and cheap food. The weight of spending on entertainment, leisure and durable goods is decreasing. Therefore, appropriate changes must be made to the formula.

In addition to the consumer price index, the concept of “Deflator” is often mentioned. The difference is that the deflator takes into account everything that is produced in the country and included in its GDP in prices current year. For example, production and refining, investments in oil production and oil refining. The CPI only takes into account what matters to people's consumption, namely the cost of gasoline. In addition, the deflator does not include what is not produced in Russia. Meanwhile, the share of the imported component in the consumption basket, despite all attempts at import substitution, remains high. Considering the volatility of the ruble relative to leading foreign currencies, we can say that the GDP deflator less adequately and accurately reflects the reality of consumption than the CPI.

What's wrong with inflation

A shortcoming of the CPI that many economists often point out is its measurement of the “average hospital temperature.” Main subject disputes – the composition of the consumer basket. For the poor it will be one thing, and for the wealthy it will be another. For low-income citizens, the share of the food component inevitably increases, which can reach ¾ of the basket. Wealthier people spend less than half of their expenses on food.

This affects the public's perception of official statistics. It is no coincidence that the concept of “personal inflation” appeared. It just so happens that in Russia it usually exceeds the official one. For example, the CPI from December 2017 to December 2016 was published with a value of 102.51%. It is unlikely that any of the readers felt that their consumer basket grew by 2.51% over the year. Of course, one can object to this that citizens give only everyday assessments based on sensations. But I think that in such cases a personal calculator works more accurately than an official one.

The second point is related to living wage, which, according to Rosstat’s methodology, actually reflects the threshold of human survival. Let's look at the latest data from Rosstat:

In developed countries, this indicator is measured to determine a “decent standard of living.” From this point of view, the index should include, in addition to the basic set, visits to restaurants, beauty salons, keeping pets, spending on taxis, tutors, etc. That is, factors without which it is impossible to imagine the life of a modern person.

There is another flaw in the CPI index: it does not take into account asset prices. And this doesn't just apply to investors who will buy more or less shares with spare cash. Price , valuable papers, credit resources make significant adjustments to the consumer behavior of the entire population. Thus, an increase in loan rates reduces consumer demand, and an increase in housing prices makes it more expensive. Therefore, the CPI should not be looked at in isolation from other important indicators - stock indices, key rate, the level of housing prices (American equivalent - HPI, Housing Price Index).

Why should an investor watch the CPI?

Changing the price of the consumer basket established by the Government affects a number of processes important for the economy:

• Changes in the standard of living of the population;
• Inflation indicators;
• State control over tariffs of natural monopolies;
• Indexation of pensions, benefits, salaries of public sector employees, insurance payments.

At the same time, among the consequences of changes in the consumer price index are things that should be of interest to a private investor:

• Purchasing power national currency, which largely determines its prospects;
• Monetary policy of the Central Bank, including decisions on, which affects the cost of money in banks;
• Bond rates (increase in IPC - rates go down, decrease - rates go up).

The Central Bank focuses not only on the actual value of the CPI, but also on the inflation expectations of business and the population. For example, with high CPI growth rates, producers will prefer to raise prices in advance, hoping that there will still be demand. The dynamics of the CPI may indicate which direction it will move monetary policy Central Bank (ECB, Fed, etc.). Monetary measures by the authorities will affect the exchange rate of the national currency, interest rates, financial situation companies in whose shares you have invested.

Too high inflation means overheating of the economy, threatening to inflate financial “bubbles”. Too low inflation and deflation force the authorities to launch artificial stimulation by lowering rates. In relation to Russia, it should be taken into account that in economies with a large share of the public sector, high inflation does not mean overheating so much as monopoly pricing in conditions of weak competition. Low inflation, as in our case, is a consequence of the fall in real incomes of the population and the creditworthiness of private companies. And it is always better to be prepared for both a deterioration in market prospects and a recovery.

Traders track the CPI to predict trends in currencies, rates, and stock prices. It is a particularly significant indicator in the Forex market and when trading bonds. Exchange rates and the yield of debt securities directly depend on the rates of central banks, and they, in turn, are very sensitive to inflation expectations. Monitoring the CPI in this case is an early warning measure of possible changes in monetary policy.

The psychological factor plays an important role here. Even a strong change in the CPI, if it fits into the forecasts and the usual behavior of the regulator, can leave the exchange rate and the Central Bank rate unchanged. But if the inflation index has changed against the expected trend, this can cause volatility and even panic in the market.

Inflation expectations influence both the behavior of investors and ordinary consumers. Projected price increases encourage consumption rather than savings or long-term investment. Example: the situation on the Russian automobile market at the end of 2014. Car dealerships fulfilled their plans by 200%, because buyers spent their savings (sometimes their last) on cars that many did not even plan to purchase. However, expectations turned out to be, from a layman’s point of view, justified, because car prices have since increased by almost 50%. Another thing is that buying a car is not the most best investment, because its value only falls in proportion to the year of manufacture, mileage and depreciation.

An increase in the CPI is normal in market economy and indicates an increase in consumer demand. Usually the consequence is a strengthening of the national currency. But only if the country’s Central Bank successfully copes with regulating inflation, and prices do not outstrip the purchasing power of the population. Otherwise, this leads to a political crisis, with dire consequences for the currency, stock market, investment capital. This also needs to be taken into account when tracking the consumer price index.

Inflation is a socio-economic phenomenon that shows whether there is an imbalance in the market for goods, services and capital.

Measuring this indicator and its regulation contributes to the effective management of the economic situation in the country.

The inflation rate is one of the main macroeconomic indicators characterizing the state of the country's economy. This level can be adjusted as economic situation in the country and by the administrative apparatus.

What is inflation?

Inflation is the process of depreciation of the money supply, which contributes to an increase in prices for consumer goods and services.

Rising inflation means that for the same amount of money you can buy different quantities of goods in different periods of time. Inflation in Russia is determined by such an indicator as the consumer price index for goods and services. This indicator characterizes the change in the price level over a certain time.

There is no clear opinion on how to fight the inflation process and whether it is worth fighting. Some experts believe that in order to maintain macroeconomic stability in the country, it is necessary to constantly regulate this process. Others are on the contrary, pointing to the fact that the root cause of inflation is imbalance aggregate demand and proposals believe that government intervention in these processes leads to an increase in the rate of price growth.

The reasons for the growth of the consumer price index can be varied:

• Internal:
  • Growth in consumer demand, without increasing supply;
  • Growth of money supply in the country;
  • Acceleration of money supply turnover.
• External:
  • Negative foreign trade balance;
  • Increase external debt countries;
  • Increase in prices for imported goods, decrease in prices for exported ones.

Inflation rate in Russia

The Ministry of Economic Development has predicted the inflation index in Russia for the next 3 years. Taking into account the country's economic recovery from the crisis, by the end of 2016 the level of consumer prices for the next year was predicted at 106.5%. This forecast has been adjusted several times due to the stabilization of the macroeconomic situation in the country.
According to Rosstat, as of October 2017, the inflation rate is significantly lower than predicted. In some months, deflation in prices for goods and services could be observed. By month, the consumer price index in 2017 remained at the level:

• January – 100.6%;
• February – 100.2%;
• March – 100.1%;
• April – 100.3%;
• May – 100.4%;
• June – 100.6%;
• July – 100.1%;
• August – 99.5%;
• September – 99.9%;
• October – 100.2%.

Thus, by December 2017, the inflation rate was 1.9%.

Inflation forecast

The Ministry of Economic Development of Russia annually develops and adjusts existing programs for the socio-economic development of the country, dividing them into short-term (1 year) and long-term (2-5 years) periods. In accordance with these programs, a forecast is created for the main macro and microeconomic indicators of Russia's economic development, including the consumer price index.

According to the socio-economic development program, consumer inflation in 2018 will increase to the target level of 4%. This growth will be caused by an increase in consumer demand due to growth in real incomes of the population. As a result, in 2018, the growth in prices for goods will increase to 4.4%; for services, the growth in prices will remain at 5%.

Inflation in Russia by year

For the period from 1991 to 2017. The Russian economy has experienced enormous shocks and long periods of recovery. The consumer price index is one of the indicators, by analyzing which one can assess exactly when the country was experiencing economic crisis and when it took the path of stabilizing development. The dynamics of inflation in Russia are clearly demonstrated in the table, from which you can build a graph of price changes.

Reporting year	Inflation rate, %
1991	160,4
1992	2508,8
1993	839,9
1994	215,1
1995	131,3
1996	21,8
1997	11
1998	84,4
1999	36,5
2000	20,2
2001	18,6
2002	15,1
2003	12
2004	11,7
2005	10,9
2006	9
2007	11,9
2008	13,3
2009	8,8
2010	8,8
2011	6,1
2012	6,6
2013	6,5
2014	11,4
2015	12,9
2016	5,4
2017	1,91