While the ruble added 5 percent in real terms in relations to consumer inflation in 2007, it rose more than 15 percent in relations to industrial prices. The picture shows an action by Russian Greenpeace which brought pieces of wood to the Russian Government headquarters to denounce government policies, allegedly designed "to turn Russia into a raw wood supplier".
Photo: Pavel Smertin
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Producers’ Prices Grow Twice as Fast as Inflation
The producers’ prices index went up 25 percent in 2007, the Russian Statistics Agency said Wednesday. Industrial prices are growing twice as fast as consumer prices which added almost 12 percent last year. In 2006, producers’ prices rose 10 percent, 13 percent in 2005 and almost 29 percent in 2004. But unlike indicators in the past two years, industrial prices soared at the end of the year adding 3 percent in November and nearly 4 percent in December alone.
Extractive industries contributed the most to the growth as their produce added 52 percent in price, compared to some 2 percent in 2006. It happened mostly due to fuel and energy materials which went up 58 percent. Apart from them, prices in the industry did not rise higher than inflation, or 10 percent. The situation in 2007 is drastically different from the year 2006 when prices for fuel raw materials slipped almost 4 percent while other minerals jumped 33 percent.
Experts attribute inflation of industrial prices to the influence of foreign markets. Fluctuations of world raw materials prices in 2007 helped fuel prices up while in 2006 quotations sent up investment goods such as metal ores. But growing expenses make producers of other goods raise prices too.
Overall, prices in manufacturing industries lifted 18 percent in 2007 against 13 in 2006. At first glance, the price growth is good for Russian companies. This is proved by data from the Statistics Agency which indicated that profits of companies were growing much faster in November 2007. But on the other hand, high prices make the goods less competitive. While the ruble added 5 percent in real terms in relations to consumer inflation in 2007, it rose more than 15 percent in relations to industrial prices. In this situation, the Russian industry will probably have to adapt to the change at the expense of growth rates.
www.kommersant.com
All the Article in Russian as of Jan. 31, 2008
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