Food, electronics, utilities: what goods and services will rise in price this summer

by time news

Food

Over the past year and a half, food has played the role of the main driver of inflation: food is becoming more expensive than anything else. The trend did not change by the summer of 2021: if the general inflation in the country was 6% in May, then the food inflation rate was 7.4% in annual terms. Well, for 5 months from the beginning of the year, food has risen by almost 5%. Last year, the collapse in food prices was mainly due to the fall of the ruble and the rupture of supply chains in a pandemic. Now these problems do not seem to exist, but others have appeared: a worldwide rise in the price of food, problems with the harvest in different countries. It has become profitable for domestic farmers to direct their products for export, and not sell them domestically. In addition, domestic producers are forced to raise prices by the non-stop growing costs of raw materials, transport, fuel … All this is included in the final price of those products that consumers see on the shelves.

Natalia Milchakova, Deputy Head of IAC Alpari comments:

“We expect that this summer we will see a rise in the price of flour confectionery and meat products, and it is also possible that the rise in prices for vegetables, which began in May this year, will continue. This year, the so-called pass-through effect is triggered, because producers’ costs have increased, and overall inflation in the country continues to grow. We expect an increase in prices for flour “confectionery” by the end of the year, but within the range of annual inflation or slightly higher, about 6%. Most likely, semi-finished meat products, including those prepared from poultry, may rise in price. This may be due to both the rise in price of poultry meat itself at the beginning of this year, and other objective reasons – an increase in the cost of feed, an increase in transport costs, etc. The growth is likely to be within the range of annual inflation. It is possible that alcohol will also rise in price, but slightly less than inflation, about 3-4% by the end of the year ”.

Marina Strogaya, executive director of the Investment and Agrarian Fund:

“Almost the entire range of food and agricultural products has already risen in price. Now this situation is a little brightened up by the seasonal factor – in summer, traditionally fruits and vegetables become cheaper, therefore, for some groups of goods, we see a decrease in cost compared to the winter period. However, if we compare with the prices of a year ago, then the rise in prices for products will be noticeable – by 10-25%. The pandemic factor also exerts pressure on prices – supply chains are disrupted. Russian manufacturers are forced to raise the cost of their products, since they exist in market conditions, buy imported equipment, pay wages and loans. If they do not raise prices now, then most likely they will not have sufficient financial stability next year. “

Housing and communal services

Utilities services will rise in price for sure – if only because the annual increase in tariffs will take place as planned from July 1. On average in Russia it will be about 4%, but in different regions the tariffs will increase from 2.4% to 6.5%.

Comments Natalia Chernysheva, specialist in the field of housing and communal services, director of the People’s Control Organization:

“The average growth rates are not very indicative. In some localities, the increase may be 8 -9%, and even 14-15% – the leaders of the regions are only concerned that the overall increase in the region does not exceed the average established value. This situation seems to be extremely unfair, and in such cases it is necessary to involve the prosecutor’s office. In addition to the increase in tariffs, the growth of utility bills will also be affected by the replacement of electricity meters with so-called “smart” ones, and the intentions of resource workers to compensate themselves for the costs of modernization and various other programs, for example, gasification. Since in different regions the tariffs for different services increase in different ways, the size of the bills will also depend on which resources are used more. If, for example, somewhere the prices for electricity rise more than for gas, and the consumption of electricity in the family also exceeds the consumption of gas, then the amounts in bills will grow more. “

Household appliances and electronics

The prices of household appliances and electronics – mainly of foreign production, depend on the exchange rate and the current import duties. In the near future, a significant number of commodity groups should rise in price, supplies of which, or their components, are carried out from abroad. First of all, this applies to computer and large household appliances, which use a large number of chips and microcircuits. Import product groups will also be affected by the fact that retailers have already sold off last year’s balances, so contracts for this year were already concluded taking into account the devalued ruble.

Natalia Milchakova comments:

“A significant rise in prices can be expected in the segment of household appliances and electronics. There are many reasons for this. First, the high deferred demand observed since the beginning of the year, since in 2020, due to lockdowns and the crisis, many Russians postponed purchases. Secondly, there is a shortage of microchips and a number of other components and components, since in the USA, China and a number of other countries due to lockdowns last year, the production of these components decreased, but prices react to this with a certain time interval. Thirdly, the growth in the cost of transportation of goods, especially the rise in the cost of sea transportation. However, taking into account the fact that this year the ruble is strengthening, and the rise in prices for a number of product groups has already occurred, we can expect that during the year, on average, household appliances and electronics will rise in price by about 10%, not more. “

Artem Deev, Head of Analytical Department, AMarkets:

“Household appliances are growing in price due to the forced shutdown of production last year, and now due to a lack of components (interruptions in work during the pandemic disrupted logistics and production chains). Also, the rates of thunderstorm transportation have increased significantly, especially by sea. For household appliances that are produced in Russia, the problems of growth in manufacturers’ costs due to the dynamics of the ruble exchange rate are urgent. I believe that over the summer, the rise in prices for household appliances will be 10-12%, depending on the type of product. “

Cars

In May, 27 car brands went up in price on the Russian market at once. In total, prices for cars increased by an average of 2.2%. The main reasons: a shortage of cars with increased demand and an increase in the cost of electronics and components for the production of cars. In the segment of used cars, there is also a slight increase in prices. Since the beginning of summer, maintenance services for some brands have also risen.

Artem Deev comments:

“Cars began to rise in price in Russia last year against the backdrop of a pandemic and high demand. Due to the highest consumer demand (an increase of 300% to the level of 2019), there was a shortage of the most popular models in 2020, because at the beginning of the year, a total lockdown in different countries caused a halt in production. Now there is a shortage of various auto components on the market, especially – chips, which are equipped with almost every modern car. Automakers in Europe, Asia and the United States are experiencing disruptions in car production, and almost every week a factory announces a production suspension or a reduction in production. This situation has already led to the fact that, on average, new cars in Russia have risen in price by 5-8% (not taking into account the last year’s rise in price). Every month in the future, cars will become more expensive by 1-1.5%. This means that by the end of summer new cars in Russia will rise in price by an average of 3-4%. According to some forecasts, the rise in car prices in 2021 will be 10-15%. “

Clothes and footwear

The apparel and footwear market has been immune to inflation for a long time, partly due to a sharp drop in demand during lockdowns, and partly due to the presence of significant stocks. Now the demand not only returned to the previous level, but also increased due to deferred purchases. Warehouse stocks, on the contrary, ran out. And new supplies are already under way at new prices – taking into account the ruble that fell last year. As a result, the currency factor and increased demand will drive up the prices of clothing and footwear.

Alexander Rozman, Senior Analyst at Forex Optimum comments:

“The volume of the Russian fashion market last year decreased by 25%, from 2.29 trillion. rubles to 1.7 trillion. rubles. This summer, new collections of clothing and footwear are starting to go on sale, in the prices of which have risen in price by more than 20% raw materials, soared several times in shipping rates, especially from Asia, the main clothing manufacturer, and increased nominal labor costs. For the Russian market, this is an especially painful stage, because along with rising costs, in 2020 the ruble exchange rate also fell sharply, so that in Russia the growth in prices for clothing and footwear can be much higher than the world average. In addition, the process of rising prices for clothing and footwear may have seasonal waves. The main increase in prices will affect the summer collections, because they are now on sale. Closer to autumn, we will see the same thing with autumn clothes, and then with winter ones. The average bill for a buyer of clothes and shoes in 2021 remained the same, about 4 thousand rubles, but taking into account inflation, it is clear that Russians have become less buying clothes. “

Should we expect prices to decline?

The dynamics of prices for goods depends on global and national factors, says Associate Professor of the Department of Finance and Prices of the PRUE. G.V. Plekhanova Maria Dolgova. The former include the state of the world economy and prices in world markets. National factors include taxes and levies (excise taxes, recycling levy, environmental levy, product labeling); customs import and export duties; transportation of goods, highly dependent on gasoline prices; housing and communal services tariffs, which will change from July 1; the ruble exchange rate and its fluctuations; efficiency of manufacturers and intermediaries, their optimization of their costs. For food products, weather conditions and crop forecasts are also important. “Since most of these factors have an upward effect on the cost of all goods, we should not expect a decline in prices. It is only possible that the rate of rise in prices will slow down compared to the beginning of the year, ”the expert believes.

On the good news: consumers should count on a decline in prices for fresh fruits and vegetables from the end of July – this is a seasonal trend. In addition, the ruble has not yet let down: unlike last year, it does not fall sharply against the dollar and the euro, but in some periods, on the contrary, it strengthens – largely due to the consistently high price of oil.

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