Inflation is falling, but prices are rising — why?

He explained that in Russia, inflation is measured by the consumer basket — this is a set of products, goods and services that the average person or family regularly buys. It includes, for example, food, clothing, utilities, and household appliances. The cost of this conditional basket varies from month to month. This change is inflation.

Inflation is always about rising prices. We cannot talk about slowing inflation, keeping in mind that our prices are falling, because it is calculated according to the consumer basket, which includes many goods and services. And some things may become more expensive, some may become cheaper. Therefore, when talking about slowing inflation, we are saying that prices are rising, but more slowly— said Peretokin.

For example, last year in Crimea, chicken meat went up in price by 13%, this year by 7%. This means that inflation is slowing, but prices for a particular product have still increased. But the price of foreign tours, on the contrary, fell by 15%. However, this was felt only by tourists who travel frequently; for other Crimeans it was not noticeable. In general, the conditional consumer basket includes about 560 items of goods and services, but people notice changes in prices only for those goods that they consume. For more details, watch our video.

“Simple Economics” is a joint project of RIA Novosti Crimea and the Bank of Russia Branch for Crimea. This is an honest and clear conversation about finances without complex terms and unnecessary theory. Experts examine everyday issues using specific examples and explain how decisions in the economy affect everyone’s wallet.

source: RIA Novosti Crimea