CBR Quarterly Inflation Review - Q3 2006
Central bank: cbr | Type: quarterly_review | Date: 2006-09-30

THE CENTRAL BANK
OF THE RUSSIAN FEDERATION
(BANK OF RUSSIA)
Quarterly
Inflation
Review
2006 Q3
Research and Information Department
Introduction........................................................... 1
Inflation Dynamics ................................................... 3
Monetary Conditions .............................................. 17
Statistical Addendum ............................................. 26
1 2006 Q3
Inflation Dynamics
Introduction
Consumer price growth continued to slow
down in Russia in the period from January through
September 2006. Core inflation and growth in the
prices of goods and services not included in the
calculation of the core consumer price index were
slower than last year. Overall, inflation dynamics
were affected by factors resulting from adminis-
trative decisions and factors controlled by the
monetary and exchange rate policy pursued by the
Bank of Russia.
The factor that had a favourable effect on
consumer price inflation in January-September
2006 was the slowing of growth in the prices of
paid services provided to the public, including ad-
ministered prices. A major contributing factor was
the passage in 2005 of amendments to Federal
Law No. 210-FZ, dated December 30, 2004, “On
the Principles of Regulating Tariffs Set by House
Maintenance and Utility Services,” and the Fed-
eral Tariff Service’s Order No. 853-e/4, dated De-
cember 29, 2005, which set limits on growth in
housing and utility charges for each region.
The reduction of core inflation was largely
due to the slowing of growth in food prices, ex-
cluding vegetable and fruit prices. There was also
a year-on-year slowing of growth in non-food
prices, but it was not as marked as that of food
prices. Motor petrol prices rose faster than non-
food prices in general in January-September 2006
but slower than in the same period last year.
Stable exchange rate dynamics were a ma-
jor factor of positive inflationary expectations and
contributed to the slowing of inflation.
Foreign exchange continued to flow into the
country in the third quarter of this year (exclud-
ing September) as the world price of Urals crude
kept on rising and the dollar was sliding against
the euro on the world currency market. Thanks to
the maintenance of the managed floating ex-
change rate regime, this continued to account for
the large-scale expansion of the money supply.
At the same time, core inflation dynamics show
that core inflation has become less sensitive to
growth in the money supply.
Throughout the period of January-Septem-
ber 2006 the M2 growth rate increased and as of
October 1, 2006, it stood at 46.6% in the moving
12-month period (as compared with October 1,
2005). Taking into consideration the current mac-
roeconomic conditions, the Bank of Russia raised
its estimate of growth in the demand for rubles
from 25-28% to 36-39%. However, money sup-
ply growth remained high also from the viewpoint
of the readjusted money demand projections for
the year, perpetuating the monetary pressure on
inflation. This acceleration of M2 growth means
more uncertainty at the beginning of 2007 and,
consequently, the worsening of the starting con-
ditions.
The Bank of Russia scaled down significantly
its interventions on the domestic forex market in
the third quarter as compared with the second,
but they were bigger than in the third quarter of
last year. As a result, in the first nine months of
this year the Bank of Russia purchased almost
50% more foreign exchange than in the same
period last year. To reduce the effect of money
supply growth on inflation in the economy, the
Bank of Russia continued to take liquidity
sterilisation measures in the third quarter. In Au-
gust, for example, it raised for the third time this
year interest rates on deposit operations con-
ducted on standard terms and adjusted interest
rates on deposit operations conducted at auctions
and operations with Bank of Russia bonds (OBR).
As was the case last year, a large part of
aggregate liquidity was absorbed by the Russian
Government’s Stabilisation Fund and settled in the
federal government’s accounts with the Bank of
Russia.
Monetary regulation along with the
Stabilisation Fund helped sterilise a large part of
the money overhang. In addition, low-liquidity
ruble-denominated components, such as time
deposits, accounted for most of the increase in
the money supply in January-September and this
is a factor of great importance for alleviating the
inflationary consequences of monetary growth.
2006 Q3
At the same time, inflation dynamics and the ve-
locity of money were favourably affected by the
continued contraction of cash in the monetary ag-
gregate M2, a trend registered during most of the
period under review.
In the remaining months of this year core
inflation will be affected (if other conditions re-
main unchanged) by first-half money supply dy-
namics, current exchange rate and non-interest
budget expenditure dynamics and the persistent
sterilising function of the budget.
3 2006 Q3
Inflation Dynamics
Inflation Dynamics
Consumer Prices
According to the Federal State Statistics Ser-
vice (Rosstat), consumer prices rose 7.2% in Janu-
ary-September 2006 as against 8.6% in the same
period last year. In the first quarter consumer
prices gained 5.0%, in the second 1.1% and in the
third 1.0%. In July consumer prices edged up 0.7%,
in August 0.2% and in September 0.1%.
In September inflation calculated for the
moving 12-month period stood at 9.5% as against
9.6% in August.
Core inflation stood at 5.9% in January-
September 2006 as against 6.3% in the same pe-
riod last year. The core consumer price index reg-
istered 2.8% in the first quarter, 1.1% in the sec-
ond and 2.0% in the third. In July it registered
0.5%, in August 0.6% and in September 0.8%. In
September core inflation calculated for the mov-
ing 12-month period stood at an estimated 7.9%,
unchanged from August.
According to estimates, growth in the prices
of goods and services included in the calculation
of the core consumer price index accounted for
4.6 percentage points, or 63.4%, of overall con-
sumer price growth in January-September 2006
(as against 5.0 percentage points, or 58.3% in
January-September 2005).
Food prices, excluding vegetable and
fruit prices, increased 6.6% in January-Septem-
ber 2006 as against 7.2% in the same period of
2005. In the first quarter of the year they gained
3.9%, in the second 0.6% and in the third 2.0%.
Estimates show that growth in the prices of this
group of goods accounted for 2.6 percentage
Consumer price inflation (%)
Growth (September 2006
on December 2005)
Growth (September 2005
on December 2004) Outcome
Prices of goods and services included in core inflation calculation 5.9 6.3 Retardation by 1.1 times
of which:
- food prices, excluding vegetable and fruit prices 6.6 7.2 Retardation by 1.1 times
- non-food prices 4.3 4.5 Slight retardation
Prices of services provided to households 12.0 18.5 Retardation by 1.5 times
of which:
- administered service prices 12.2 21.4 Retardation by 1.8 times
Vegetable and fruit prices 8.2 6.2 Acceleration by 1.3 times
2006 Q3
points, or 35.7%, of overall growth in consumer
prices in January-September 2006 as against 3.0
percentage points, or 35.1%, in the same period
last year.
The beginning of this year saw a sharp ac-
celeration of growth in the price of granulated
sugar: in January it rose 10.7%, in February 30.3%
and in the first quarter 48.8%. In the second quar-
ter sugar prices declined, whereas in the third they
came down and went up. Overall, in January-Sep-
tember 2006 the price of granulated sugar gained
37.3% as against 2.2% in the same period last
year. Sugar price dynamics on the consumer goods
market were adversely impacted by the fall in out-
put and growth in domestic producer prices and
world prices of refined sugar.
Significant growth in sugar prices on the
domestic consumer goods market in January-Sep-
tember 2006 is believed to have accounted for 0.6
percentage points of growth in the prices of goods
and services included in the calculation of the core
consumer price index.
The situation on the meat market has re-
turned to normal this year. In the first nine months
of 2006 meat and poultry prices increased 3.9%
as against 17.6% in the same period last year. Poul-
try price dynamics had a major effect on meat and
poultry price dynamics. In January-September
2006 poultry prices fell 8.0%, whereas in the same
period last year they rose 21.9%. Beef and pork
prices went up 11.2% and 6.8%, respectively, in
January-September 2006, whereas in the same
period last year they rose 20.0% and 15.4%, re-
spectively.
On December 5, 2005, the Russian Govern-
ment passed Resolution No. 732, which set import
quotas on meat for the next four years. This move
enabled foreign trade companies to pursue a more
Food price inflation rates (%)
Growth (September 2006
on December 2005)
Growth (September 2005
on December 2004) Outcome
Bread and bakery products 7.6 2.2 Acceleration by 3.5 times
Cereals and legumes 11.0 0.4 Acceleration by 27.5 times
Pasta 3.8 1.9 Acceleration by 2.0 times
Meat and poultry 3.9 17.6 Retardation by 4.5 times
Fish and seafood 5.7 11.5 Retardation by 2.0 times
Milk and dairy products 4.6 4.7 Slight acceleration
Butter 4.0 3.8 Acceleration by 1.1 times
Sunflower oil -1.2 2.6
Granulated sugar 37.3 2.2 Acceleration by 17.0 times
Alcoholic beverages 7.4 6.0 Acceleration by 1.2 times
5 2006 Q3
Inflation Dynamics
balanced import policy, cushioning undesirable
fluctuations in supply.
Fish and seafood prices rose 5.7% in Janu-
ary-September 2006, or twice less than in the
same period last year.
Prices of milk and dairy products rose 4.6%
in the nine months of 2006 as against 4.7% in the
same period last year.
Growth accelerated in January-September
2006 as compared with the same period of 2005
in the prices of bread and bakery products (to
7.6% as against 2.2%), cereals and legumes (to
11.0% as against 0.4%) and pasta (to 3.8% as
against 1.9%). It was the result of a significant rise
(by 16.6%) in grain producer prices (in January-
September 2005 these prices had fallen 10.4%).
As in the previous three years, nine-month
growth in food prices, excluding vegetable and
fruit prices, was faster than non-food prices.
Non-food prices increased 4.3% in Janu-
ary-September 2006 as against 4.5% in the same
period last year. In the first quarter they rose 1.3%,
in the second 1.0% and in the third 1.9%.
Petrol prices soared 12.2% in the nine
months of this year as against 15.1% in January-
September 2005.
According to estimates, growth in non-food
prices accounted for 1.5 percentage points, or
20.2%, of overall consumer price growth (as
against 1.5 percentage points, or 17.1%, in Janu-
ary-September 2005).
Vegetable and fruit prices gained 8.2% in
January-September 2006 as against 6.2% in the
same period last year. Average growth in veg-
etable and fruit prices in January-September 2006
was higher than in the nine months of 2001-2005.
Estimates show that growth in vegetable
and fruit prices in January-September 2006 ac-
counted for 0.3 percentage points, or 4.5%, of
overall consumer price growth, whereas in the
same period last year it accounted for 0.3 percent-
age points, or 3.0%.
Food prices rose 6.7% in January-Septem-
ber 2006 as against 7.1% in the same period of
2005.
2006 Q3
Prices of paid services provided to the
public increased 12.0% in January-September
2006 as against 18.5% in the same period last year.
In the first quarter of this year they went up 8.0%,
in the second 1.9% and in the third 1.8%. Rent and
utility charges rose 16.8% as against 31.2% in
January-September 2005.
The reduction of consumer price inflation in
the period under review was due to the slowing
of growth in service prices, including administered
prices. It was also the result of the amendments
made in 2005 to Federal Law No. 210-FZ, dated
December 30, 2004, “On the Principles of Regu-
lating Tariffs Set by House Maintenance and Util-
ity Services,” and the Federal Tariff Service’s Or-
der No. 853-e/4, dated December 29, 2005,
which set limits on growth in housing and utility
charges for each region and established control
over their dynamics.
Passenger transport fares rose 10.8% and
communication fees 1.8% in January-September
2006 as against 11.4% and 4.9%, respectively, in
the same period in 2005.
Pre-school tuition fees increased more than
other service prices (by 25.6% as against 27.0%
in January-September 2005).
Growth in the prices of services provided to
the public stood at 5.7%, exceeding by 2.1 times
growth in the prices of goods in January-Septem-
ber 2006 (in the same period last year public ser-
vice prices increased 3.1 times more than the prices
of goods). Estimates show that growth in public
service prices in January-September 2006 ac-
counted for 2.9 percentage points, or 39.6%, of
overall consumer price growth (as against 3.9 per-
centage points, or 44.9%, in the same period of
2005). At the same time, the administered ser-
vice prices increased by an estimated 12.2% in the
period under review (as against 21.4% in January-
September 2005).
The analysis of the distribution
1 of price
increases (September on December of previous
year) for goods and services in 2003-2006 was
based on a sample of more than 400 types of con-
sumer goods and services, without taking into ac-
count their weights in consumer spending.
In the past four years prices of more than
70% of the consumer goods and services under
review grew in the range of 0% to 12% in Janu-
ary-September. In January-September 2006 prices
of 39.9% of goods and services increased in the
range of 4% to 8% (37.8% of goods and services
were in this price growth range in 2005 and 35.3%
in 2004).
In the past three years the median that
characterises growth in the prices of the bulk of
the goods and services in this kind of distribution
has remained virtually unchanged (in January-
1 This distribution has been built on the basis of a smoothed histogram. The length of the interval (4 percentage points) was
selected so that each interval included a sufficient number of observations, while the histogram reflected the qualitative charac-
teristics of the sample distribution.
7 2006 Q3
Inflation Dynamics
September of 2004 and 2005 it was 5.7% and in
January-September 2006 it was 5.6%). In 2006
the average decreased by 0.9 percentage points
from 2005 and stood at 6.4%. The standard de-
viation declined to 5.5% from 8.3% a year ear-
lier. The narrowing of the spread between price
increases in January-September 2006, as com-
pared with the same period last year, was due to
the significant decrease in the standard deviation
of service prices and food prices. In January-Sep-
tember 2006 the price growth median was the
highest in the services sector and the lowest in the
non-food products sector.
The statistical analysis of food price in-
creases has shown that in January-September
2006 the distribution median had increased as
compared with the same period in 2005. In the
first nine months of this year, more than a half of
all food products (52.7%) were in the 4-8% price
growth range (against 36.6% in the same period
last year). The standard deviation decreased from
7.0% in January-September 2005 to 5.7% in the
same period this year.
The distribution of non-food price increases
was characterised by a pronounced maximum and
a small standard deviation. Consequently, growth
in the prices of most goods in this group was
within a small range. In January-September 2006
goods in the price growth range of 0-8% ac-
counted for 82.3% of the entire range of non-
food products (85.8% in the same period last
year). The standard deviation of non-food prices
was 3.9%, that is, 1.4 times smaller than that of
goods and services as a whole.
Prices of most of the paid services provided
to the public in January-September 2006 rose
within the range of 8% to 12%. In the same pe-
riod last year prices of 12.1% of services declined,
whereas prices of 11.2% of services increased by
more than 24%. In January-September 2006 the
respective percentages were 4.5% and 2.7%.
These dynamics of the distribution of price in-
creases were characterised by the reduction of the
standard deviation to 6.2% in January-September
2006, which represents a decrease of 50% from
the same period in 2005.
According to Rosstat data, consumer price
growth in all federal districts in January-Septem-
ber 2006 was slower than in the same period last
year.
Estimates show that the difference between
various Russian territories and regions in terms of
the price of the fixed set of goods and services
used by the Federal State Statistics Service for in-
terregional comparisons of the purchasing power
of the population decreased in January-Septem-
ber 2006. The regional difference ratio
2 in that
period decreased to 29.5% from 45.2% in Janu-
ary-September 2005.
2 The regional difference ratio is calculated as the difference between the price of a fixed set of goods and services in the mo st
expensive and the cheapest regions relative to the national value of the same set.
2006 Q3
The rates of growth in vegetable and fruit
prices differed the most by region in January-Sep-
tember 2006. In the Urals Federal District, for in-
stance, vegetable and fruit prices increased 16.5%,
whereas in the Volga Federal District they rose
3.1%. As for the rates of growth in non-food
prices and food prices, excluding vegetable and
fruit prices, they were roughly the same in all fed-
eral districts.
Growth in service prices slowed significantly
in all federal districts in January-September 2006,
as compared with the same period last year, es-
pecially in the Southern Federal District (by 9.5
percentage points) and the Far Eastern Federal
District (by 11.1 percentage points). In Russia as a
whole, growth in service prices slowed down by
6.5 percentage points.
According to data provided by the Institute
for the Economy in Transition, the inflationary
expectations of managers of the leading indus-
trial enterprises somewhat subsided in January-
September 2006, as compared with the same pe-
riod in 2005. Growth in selling prices was predicted
by no more than 36% of respondents as against
38% in January-September 2005.
Producer prices
Producer prices rose 15.2% in January-Sep-
tember 2006 as against 15.7% in the same period
last year. The most significant producer price
growth was registered in the mining sector: it ex-
ceeded producer price growth in industry as a
whole by 70%. Compared to January-September
2005, however, growth in producer prices in the
mining sector slowed from 45.9% to 25.8%. At
the same time, fuel and energy producer prices
increased 26.3% as against 53.1% in January-Sep-
tember 2005. Producer price growth in the min-
ing sector accounted for 37.5%, or 5.7 percent-
age points, of overall producer price growth in the
nine months of this year as against 57.6%, or 9.1
percentage points, in the same period of 2005.
Meanwhile, in the manufacturing sector
producer price growth accelerated to 12.7% from
7.2% in January-September 2005. There was a
sharp rise in producer prices in the metallurgy sec-
tor (to 23.5% as against 4.2%), which was mainly
due to the acceleration of growth in the prices of
non-ferrous metals amid growth in the world
prices of these products. Petroleum products pro-
ducer prices also increased significantly (by 28.3%
as against 34.2% in January-September 2005).
Competition, especially by imports, contin-
ued to affect price formation in the manufactur-
ing industries, which are mostly oriented to con-
sumer demand. As a result, producer prices in the
industries producing foodstuffs and beverages,
tobacco products, textile and clothing, and leather
and leather goods and footwear grew more slowly
in January-September 2006 than in the manufac-
turing sector as a whole.
As for the manufacturing industries whose
output goes to the consumer goods market, price
growth accelerated in January-September 2006,
as compared with the same period last year, only
in the production of foodstuffs including bever-
ages and tobacco (from 2.8% to 5.6%). In the
textile and clothing industry price growth slowed
down to 2.8% and in the production of leather,
leather goods and footwear to 6.1%. In January-
September 2005, producer prices in these indus-
tries increased 3.5% and 6.3%, respectively.
According to estimates, growth in producer
prices in the industries oriented immediately to the
consumer goods market in January-September
2006 accounted for 3.0 percentage points, or
50.8%, of increase in the prices of goods and ser-
vices included in the core inflation calculation (2.0
percentage points, or 31.7%, in the same period
in 2005).
Prices in the production, transmission and
distribution of electricity rose 10.0% in January-
September 2006 as against 12.0% in the same
9 2006 Q3
Inflation Dynamics
period last year. Freight transportation charges
increased 13.9% in the nine months of the year as
against 22.5% in January-September 2005. Rail-
way fares were up 8.9% in the period under re-
view as against 13.3% in January-September 2005.
Communication fees for corporate enti-
ties edged up 0.5% in January-September 2006,
as in the same period last year.
Producer prices in the construction sector
rose 8.7% in the nine months of the year as against
9.4% in January-September 2005.
Agricultural producer prices increased
1.2% in January-September 2006, whereas in the
same period last year they fell 1.1%. Growth in pro-
ducer prices in the crop-growing sector made the
biggest contribution to the increase in agricultural
producer prices. Over the nine months of this year
crop grower prices increased 8.0%, whereas in the
same period last year they declined 8.2%. The
most significant increase was registered in potato
and grain prices, which rose 17.5% and 16.6%, re-
spectively, whereas in the same period of 2005,
potato prices went up 18.8%, while grain prices
dropped 10.4%.
Prices of livestock products were down 2.7%
in January-September 2006, whereas in the same
period last year they rose 3.7%. There was a slow-
ing of growth in livestock and poultry prices (to
2006 Q3
1.3% from 16.7% in January-September 2005). As
last year, egg producer prices dropped (by 11.7%
as against 26.3% in January-September 2005).
Foreign trade prices
In January-September 2006, the prices of
Russia’s major export commodities3 on world com-
modity markets were higher than in the same pe-
riod of 2005. However, growth in energy prices
has slowed down this year. The price of oil gained
26% in January-September 2006 as against 45%
in the same period a year earlier, petroleum prod-
uct prices went up 26% as against 47% and the
price of natural gas in Europe increased 39% as
against 47%. A major reason for the slowing of
growth in the world price of oil was the accumu-
lation of US commercial oil stocks, which this year
have reached an 11-year high. In addition, growth
in the supply of oil on the world market and the
alleviation of political tension in the world led to
the reduction of the price of oil, which began in
the latter half of August. Last September oil prices
were virtually the same as in September 2005. As
a result, in the third quarter of this year the aver-
age price of oil remained virtually unchanged from
the previous quarter. OPEC’s decision to cut out-
put by the cartel members by 1.2 million barrels
per day from November 1 has not changed the
trend towards the price downturn on the oil mar-
ket.
In September 2006, the price of Urals crude
was 8.8% higher than in December 2005 (in Sep-
tember 2005 it was 1.6 times higher than in De-
cember 2004). The price of natural gas in Europe
rose 17.1% as against 30%, premium petrol 8.1%
as against 90%, diesel fuel 11.7% as against 50%
and fuel oil 13.1% as against 100%. Ferrous metal
prices were down 2.0%, whereas in September
2005 they were up 7.7%. Growth in non-ferrous
metal prices slowed down and last September they
increased 45% on average as against 2.2% in Sep-
tember 2005. As a result, in September 2006 en-
ergy prices were 11.1% higher on average than in
December 2005 (in September 2005 they were
51% higher than in December 2004) and non-en-
ergy prices gained 11.2% as against 7.3% a year
earlier.
Food price dynamics
4 were different on
world markets during the first nine months of the
year. Beef prices rose 1.9% last September as com-
pared with December 2005 (in September 2005
they were 2.2% higher than in December 2004),
3 Average prices have been calculated on the basis of data provided daily by the following news agencies and exchanges: Reuters
for oil, Petroleum Argus for petroleum products (petrol, diesel fuel and fuel oil) and the London Metal Exchange for non-ferrous
metals (aluminium, copper and nickel). Average monthly prices of natural gas and ferrous metal price indices have been calculat-
ed on the basis of data provided by the World Bank and other goods on the basis of data provided by the IMF.
4 Average prices of raw and refined sugar have been calculated on the basis of data provided daily by the London Commodity
Exchange, average monthly prices of beef and wheat on the basis of data provided by the World Bank and pork and poultry on
the basis of IMF data.
11 2006 Q3
Inflation Dynamics
poultry prices were down 0.3% and pork prices
were up 12% (in September 2005 poultry prices
rose 2.2%, whereas pork prices fell 6.6%).
The price of raw sugar on the world market
dropped 3% in the second quarter of the year
quarter on quarter and 26% in the third. The US
Department of Agriculture expects Brazil’s sugar
cane harvest to be 8% bigger in the 2006/2007
season than in the previous season due to good
weather and has raised raw sugar output and ex-
port estimates. In addition, India is expected to
gather in a record sugar cane harvest due to the
expansion of plantations and abundant rainfall.
A good sugar cane harvest is also expected in Thai-
land, while Cuba has expanded sugar cane plan-
tations by 25% in the 2006/2007 season. The price
of refined sugar will remain high due to a fall in
output in the European Union and the reduction
of stocks in China. At the same time, a trend to-
wards a price downturn has emerged on the re-
fined sugar market: in the third quarter of this year
the price of refined sugar declined 7.2% quarter
on quarter. As a result, in September 2006 the
price of raw sugar fell 21.5% as compared with
December 2005, while that of refined sugar rose
28.7% (in September 2005 the price of raw sugar
increased 11.6% and refined sugar was up 30.5%).
Grain prices have increased significantly this
year. In its October review, the International Grains
Council lowered its estimates of the wheat and
maize harvests in the 2006/2007 agricultural year,
mainly because of the drought in Australia and
some other countries of the southern hemisphere,
and leading exporters’ grain stocks (grain stocks
in the EU, United States, Canada, Australia and
Argentina are expected to contract by more than
one-quarter as compared with the previous year).
US wheat export prices last September rose 19.2%
as compared with December 2005 (in September
2005 they increased 3.8%).
Thanks to growth in the prices of major ex-
port products, which exceeded growth in import
prices, the terms of Russia’s trade with foreign
countries
5 improved in January-September 2006,
but the rise of the terms of trade index slowed
down as compared with the same period last year.
Growth in export prices, especially energy
and non-ferrous metal prices, and export volumes
of some products were the factors of the contin-
ued expansion of Russian exports. However,
growth in Russian exports has slowed down. In the
nine months of the year exports of goods in-
creased 28.2% to $223.9 billion, whereas in the
same period last year exports grew 35.4%. Fuel
and energy products accounted for most of the
increase in the value of exports of goods.
Growth in imports decelerated slightly in the
first nine months of 2006, but the rate of growth
was close to that in exports. Compared to the same
period of 2005 imports grew 28.4% to $112.4 bil-
lion (29.0% in the first nine months of 2005).
Imports increased primarily as a result of the ex-
5 The ratio between export and import price indices.
2006 Q3
pansion of import volumes and growth in contract
prices of most of the imported goods. The accel-
eration of growth in engineering imports as com-
pared with January-September 2005 led to signifi-
cant increase in the value of imports.
Demand
Domestic demand
GDP increased 6.5% in January-June 2006
as against 5.4% in the same period of 2005. The
parameters of economic development were prin-
cipally determined by consumer and investor de-
mand.
Household spending on final consumption
increased 11.4% in January-June 2006 as against
10.6% in the first half of 2005. Consumer spend-
ing continued to grow in the third quarter of the
year, stimulating the expansion of retail trade
turnovers. In the nine months of this year retail
trade turnover increased 12.3% as compared with
the same period last year (in January-September
2005 it grew 12.6%). Non-food sales grew faster
than food sales. The value of paid services pro-
vided to the public increased 7.8% as against 6.8%
a year earlier.
Government expenditures on final con-
sumption increased 3.7% in the first half of this
year as against 1.7% in the same period last year.
The sensible budget expenditure policy and the
absorption of excess liquidity by the Russian
Government’s Stabilisation Fund contained
growth in consumer prices.
Gross capital formation increased 14.1% in
January-June 2006 as against 8.6% in the same
period last year. Fixed capital investment ex-
panded 10.8% in January-June and 11.7% in Janu-
ary-September (as against 9.8% in January-Sep-
tember 2005). In the first half of this year 63.9%
of total fixed capital investment was made in large
and medium-sized transport, communications,
manufacturing and mining enterprises. Compared
to the same period in 2005, the share of trans-
port and communications enterprises expanded
from 24.9% to 25.7% of total fixed capital invest-
ment and the share of mining enterprises in-
creased from 17.5% to 19.5%. The share of the
manufacturing sector contracted from 19.2% to
18.7% of total fixed capital investment.
In January-June 2006, as in the same period
last year, more than a third of fixed capital invest-
ment was made in the active part of fixed assets,
whose technical retooling was a major factor of
growth in labour productivity and created condi-
tions for the reduction of price growth.
As growth in imports of goods and services
far surpassed growth in exports in the first half
of the year, net exports of goods and services de-
clined by 12%.
Foreign demand
World economy and international financial
markets
US GDP increased by an estimated 3.4% in
the first nine months of this year as compared with
the same period last year (in January-September
13 2006 Q3
Inflation Dynamics
2005 it grew 3.2%); the eurozone registered a
2.5% increase in GDP (as against 1.4% a year ear-
lier); China’s GDP expanded 10.7% (as against
9.8% in the same period last year).
Growth in industrial output, job numbers,
real disposable income and sales in the United
States indicate the continuation of the cyclic eco-
nomic recovery, although the first nine months of
the year saw a major downturn in housing con-
struction, a sector of the US economy highly sen-
sitive to interest rates. There has been a slowing
of growth in individual consumption and fixed
capital investment. The expansion of finished
product inventories made a significant contribu-
tion to GDP growth in the United States in Janu-
ary-September 2006. In the second quarter of the
year GDP growth slowed down dramatically as
compared with the first quarter and the slowdown
continued in the third.
The US trade deficit increased by $66.8
billion in January-September 2006 as compared
with the same period last year as imports of goods,
especially crude oil, grew faster in value than ex-
ports. The deficit in the 25-member European
Union’s trade in goods with the rest of the world
rose by 62.7 billion euros, or almost doubled,
mainly due to the increase in the value of energy
imports. China’s trade surplus amid the acceler-
ated growth in exports expanded by $41.5 billion.
In the first nine months of the year China ranked
second among the United States’ trading partners
in terms of import volumes (about 15% of total
imports) and third in terms of trade turnover (over
11% of total trade turnover). The deficit in trade
with China accounted for more than a quarter of
US total trade deficit. China also accounted for
9.5% of EU trade turnover and the deficit in trade
with China accounted for more than 60% of EU
total trade deficit.
US inflation slowed to 3.1% last Septem-
ber from 4.5% in September 2005. Core inflation
made the biggest contribution to the change of
the general level of consumer prices in the United
States in the period under review. Energy prices
rose 10.6% (in September 2005 they were up
35.3% on December 2004), of which the price of
motor fuel rose 17.5% (54.8%) and energy prod-
ucts used for household needs
7 4.2% (16.3%).
Food prices edged up 1.7% (in September 2005
they were up 1.5% on December 2004) and their
growth had no significant effect on the general
level of consumer prices in the United States.
Sugar, grain and vegetable and fruit prices in-
creased at the most rapid rates.
US core inflation stood at 2.5% in Septem-
ber 2006 as compared with December 2005 (in
September 2005 it stood at 1.8%). As before,
growth in rent, which rose 3.7% as against 2.1% a
year earlier, made the biggest contribution to core
inflation. Among the other major contributors to
core inflation were tuition fees, which increased
5.8%, and health service charges and medicine
prices, which grew 3% (in September 2005 these
increased 5.9% and 3.1%, respectively, against
December 2004).
Eurozone inflation slowed to 1.4% last
September from 1.9% in September 2005. Growth
in energy prices and core inflation
8 contributed to
the rise in consumer prices equally (by 0.5 percent-
age points). Growth in food prices, including al-
coholic beverages and tobacco products, also
made a substantial contribution to consumer price
growth (0.4 percentage points). Energy prices
gained 5.2% as against 15.2% in September 2005
relative to December 2004, of which the price of
liquid fuel and lubricants for transport vehicles in-
creased 4.4% (22.9%) and energy used for
household needs 6.3% (6.1%). Growth in food
prices, including drinks and tobacco products,
quickened to 2% from 0.8% in September 2005
as compared with December 2004, mainly due to
the increase in vegetable and fruit prices and prices
of edible oils and fats and meat and meat prod-
ucts.
Eurozone core inflation stood at 0.7% last
September as compared with December 2005
(0.6% in September 2005), mainly as a result of
growth in the price of housing and furniture and
other household goods, hotel and restaurant ser-
vices and some kinds of individual services. The
6 Core inflation in the United States signifies growth in the prices of goods and services included in the consumer goods basket,
except foodstuffs and energy products.
7 Fuel oil, boiler fuel, coal, household gas and electricity.
8 Core inflation in the eurozone signifies growth in the prices of goods and services included in the consumer goods basket,
excluding foodstuffs, alcoholic beverages, tobacco and energy products.
2006 Q3
factor of relative price stability in this sector was
the fall in communication fees and prices of
clothes and footwear and cultural and recreational
goods and services.
The main factor of the slowing of inflation
in the United States and eurozone last September
as compared with December 2005 and relative to
September 2005 was the reduced effect of en-
ergy price growth on them. In both cases the con-
tribution of energy price growth to inflation was
the smallest in the past six months under review
and it was many times smaller than in September
2005. Besides the energy price downtrend last
September, inflation was affected by the accel-
eration of energy prices in September 2005,
caused by fears of a fall in oil production on the
Gulf of Mexico shelf after the devastating hurri-
cane and subsequent flood on the south-east
coast of the United States.
The slowing of inflation in September
2006 as compared with December 2005 was also
registered in the following countries of impor-
tance for Russian trade turnover: in Romania in-
flation was down to 2.8% (5.9% in September
2005), Brazil 2% (4%), Belarus 3.1% (4.6%),
Ukraine 6% (7.1%), Israel 0.8% (1.9%), Latvia 5%
(5.8%), Switzerland 0.3% (0.5%), South Korea
3% (3.1%) and China 1% (1.1%). Inflation accel-
erated significantly in the following countries: Iran
to 10.1% (7%), Turkey 6.7% (3.9%), Hungary
5.7% (3.2%) and India 5.2% (4%). In Japan, con-
sumer prices inched up 0.9% last September as
compared with December 2005, whereas in Sep-
tember 2005 they fell 0.1%. Inflation also accel-
erated in Kazakhstan, Slovakia, Poland, Sweden,
the Czech Republic, Britain, Lithuania and Esto-
nia.
The US Federal Reserve in the first half of
this year raised four times the benchmark in-
terest rate on the shortest term interbank
loans (federal funds rates): from 4.25% to 4.5%
p.a. in January, to 4.75% in March, to 5% in May
and to 5.25% in June. In the period from June 2004
to June 2006 the benchmark federal funds rate
had been raised by 4.25 percentage points. The
raising of the short-term interest rates in the
United States had a restraining effect on core in-
flation, but in the middle of this year the Federal
Reserve had revised its interest rate policy and at
its last three meetings held in August, September
and October, the Open Market Committee left the
benchmark federal funds rate unchanged.
The European Central Bank (ECB) in Decem-
ber 2005 raised the refinance rate from 2% to
2.5% p.a.; in March 2006 it raised it to 2.5%, in
May to 2.75%, in August to 3% and in October to
3.25%. Each month in the period from January to
August 2006 eurozone inflation exceeded by 0.2-
0.5 percentage points the inflation target set by
the ECB (in each accounting month consumer
prices rose 2% year on year). In September, how-
ever, it slowed to 1.7%.
The LIBOR on deposits placed in US dol-
lars for terms of one month to one year rose by
0.5-1.0 percentage points in September 2006 as
compared with December 2005 and on similar
deposits placed in euros it increased by 0.7-0.9
percentage points
9. The yield on US government
securities with terms to redemption from two to
ten years increased by 0.3-0.4 percentage points,
while the yield on similar eurozone financial as-
sets gained 0.4-0.8 percentage points. The LIBOR
on the dollar-denominated deposits with all ma-
turity periods and the yield on US treasuries with
all terms to redemption in September were higher
than the LIBOR on the euro-denominated depos-
its and the yield on the eurozone government se-
curities. Since December 2004 the US benchmark
9 Here and below the source of data is the Reuters agency.
15 2006 Q3
Inflation Dynamics
federal funds rate has been higher than the ECB’s
refinance rate (since October 11, 2006, the differ-
ence has been 2 percentage points and its highest
level since the beginning of this year and over the
period since December 2004 has been 2.5 percent-
age points).
The US dollar depreciated against the
major European and Asian currencies on the
world currency market in the first nine months of
the year. The factors behind the dollar’s deprecia-
tion were imbalances in US foreign trade, the tran-
sition by the Federal Reserve to the policy of keep-
ing US short-term interest rates unchanged,
growth in interest rates in the eurozone, Britain
and Japan and a more flexible exchange rate policy
pursued by China since the middle of last year. In
September 2006 the dollar fell 7.3% against the
euro, as compared with December 2005, 8%
against the pound sterling, 1.8% against the yuan
and 1% against the yen. It depreciated against
most of the other currencies of importance for the
Russian economy (the most significant deprecia-
tion of the dollar was registered against the Ro-
manian leu, Czech koruna, Swedish krona, Slovak
koruna, Lithuanian litas, Latvian lat and Estonian
kroon).
Supply
The macroeconomic situation in January-
September 2006 was characterised by production
growth in the major types of economic activity.
Output in these types of activity increased 5.7%
as against 4.5% in the same period last year.
In the nine months of this year the indus-
trial output index registered 104.2% as against
103.6% in the same period of 2005. Industrial pro-
duction growth accelerated in January-September
2006, as compared with the same period last year,
due to the quickening of production growth in the
mining sector (from 1.1% to 2.4%) and in the pro-
duction and distribution of electricity, gas and
water (from 1.7% to 5.2%). The manufacturing
sector was the principal contributor to industrial
production growth in January-September 2006.
However, production growth rates in the manu-
facturing sector slowed down from the same pe-
riod last year (from 5.2% to 4.4%).
There was a 3.4% fall in the output of some
types of machinery and equipment (in the same
period last year it grew 7.5%). Growth slowed
down from 19.3% to 0.2% in the output of elec-
trical, electronic and optical equipment. All key
industries oriented to final consumption registered
an increase in output in January-September 2006
as compared with the same period last year. After
a downturn in January-September 2005, there
was a major rise in the production of textile and
clothing and leather, leather goods and footwear
in January-September 2006 (8.2% and 12.9%,
respectively). Growth in the production of food-
stuffs, including beverages, and tobacco products
accelerated from 3.5% to 5.2%.
Growth in the production of meat and meat
products by 5.8% in January-September 2006, as
compared with the same period last year, of which
the production of meat rose 11.7% and poultry
2006 Q3
18.5%, led to the slowing of meat prices on the
consumer goods market. The production of
granulated sugar in January-September 2006 was
down 12.9% on the same period in 2005.
Agricultural output in January-September
2006 remained virtually unchanged from the same
period of 2005, whereas in January-September
2005 it expanded 2.7%. By the middle of October
farmers had thrashed 0.7% less grain than they
had done by the same time a year earlier and har-
vested 0.4% less potatoes and 1% less vegetables.
The output of major livestock products increased
in January-September 2006.
Labour market
The number of jobs in the economy contin-
ued to increase in January-September 2006. In the
nine months of the year job numbers increased
by an estimated 0.6% (in January-September
2005 the number of jobs rose 1%). Output grew
faster than job numbers, a trend indicating growth
in labour productivity. Estimates show that labour
productivity increased 5.9% in January-Septem-
ber 2006 as against 4.8% in the same period last
year. Consequently, the intensive factors of
growth continued to play a major role, containing
price increases in the economy.
Wage rose faster than labour productivity
in January-September 2006 and the gap between
them widened in that period, as compared with
January-September 2005, creating conditions for
further price growth.
The number of unemployed, calculated ac-
cording to ILO methodology, fell 0.6% in Janu-
ary-September 2006 as compared with the same
period last year (in January-September 2005 un-
employment was down 5.5%). The total number
of jobless stood at 7.1% of the economically ac-
tive population as of the end of September 2006
as against 7.3% a year earlier.
17 2006 Q3
Monetary Conditions
Monetary Conditions
Exchange rates
High energy prices brought vast amounts of
foreign currency earnings to the Russian forex
market in the third quarter of the year. The Bank
of Russia remained the net buyer of foreign cur-
rency on the domestic forex market as it con-
ducted operations aimed at cushioning fluctua-
tions in the exchange rate of the ruble against the
dollar and the euro. The structure of the bi-cur-
rency basket, used by the Bank of Russia as an
operational benchmark in its exchange rate policy,
remained unchanged (0.6 dollars and 0.4 euros).
The main event of the period under review was
the US Federal Reserve’s decision to stop raising
the federal funds rate (from August 2005 to July
2006 the Federal Reserve raised this rate seven
times and increased it from 3.5% to 5.25%). That
decision and the release of macroeconomic data
indicating the slowing of economic growth and
inflation in the United States led currency traders
on the foreign and domestic markets to believe
that the dollar would continue to depreciate.
In the third quarter of the year the dollar
kept on falling against the ruble in nominal terms
and lost 0.6% of its value (it fell 3.8% in the first
quarter and 2.7% in the second). In July the dollar
slipped 0.5% against the ruble and in August it
was down 0.3%, but in September it made a slight
gain of 0.2%. It appreciated on macroeconomic
data indicating that US economic growth had
slowed down and inflation could accelerate. This
information led market participants to believe that
the Federal Reserve might raise interest rates. The
average rate of the dollar against the ruble had
declined 7.5% since the beginning of the year,
shedding 1.9% in the first quarter, 3.5% in the
second and 1.5% in the third.
The euro/ruble dynamics on the domestic
forex market matched the euro/dollar dynamics
on international markets in the third quarter of the
year. In July the euro fell 0.1% against the ruble
and in September 1%, whereas in August the euro
gained 0.3% against the ruble. The dollar/euro
and dollar/ruble rates were affected by the simul-
taneous (August 3) raising by the European Cen-
tral Bank and the Bank of England of interest rates
by 0.25% to 3% and 4.75%, respectively.
In the third quarter the euro lost 0.8% to
the ruble in nominal terms (in the first quarter the
euro fell 1.6% against the ruble, while in the sec-
ond it gained 1.8%) and since the beginning of
the year the euro had lost 0.6% against the ruble.
The average euro/ruble rate was up 0.1% in the
third quarter (in the first the average euro/ruble
rate was down 1%, whereas in the second it was
up 1%) and since the beginning of the year it
gained 0.1%.
2006 Q3
The real rate of the ruble gained 2.2%
against the dollar and 0.9% against the euro in
the third quarter of the year and since the begin-
ning of the year the ruble gained 11.4% against
the dollar and 5.7% against the euro in real terms.
The real effective rate of the ruble against foreign
currencies rose 1.5% in the third quarter as com-
pared with the second and since the beginning of
the year it gained 7.8%.
The continuous massive inflow of export-
ers’ foreign currency earnings to the domestic
market in the third quarter of the year led to the
expansion of Russia’s international reserves, which
increased in that period by $15.6 billion, or 6.2%.
Since the start of the year Russia’s international
reserves had grown by $84 billion, or 46%, and
as of October 1, 2006, they aggregated $266.2
billion. In the same period last year the country’s
international reserves had increased by $35 billion,
or 28%.
Interest rates
The Bank of Russia this year has taken steps
to narrow the spread between interest rates on
its operations. The lower limit of the Bank of Rus-
sia interest rate band, set by the interest rate on
deposit operations on standard “tom-next” con-
ditions, was raised in the third quarter (in August)
from 1.5% to 2% p.a. The upper limit (the refi-
nance rate and overnight and currency swap rate)
was lowered in October from 11.5% to 11% p.a.
Average weighted four-week deposit auc-
tion interest rates changed within a narrower band
in the third quarter as compared with the second:
from 2.59% to 2.83% p.a. As for the three-month
deposit auctions, the upper and lower limits of the
interest rate band decreased to 3.80% and 4.45%
p.a., respectively, as compared with the second
quarter. The average weighted yield at the Bank
of Russia bond (OBR) auctions held in the third
quarter declined as compared with the second
quarter and varied from 3.98% to 4.99% p.a. The
average weighted interest rate on repo operations,
the principal market instrument used to provide
liquidity, rose slightly to stand at 6.14%.
MIACR interest rates on overnight loans
extended in rubles on the interbank market in the
19 2006 Q3
Monetary Conditions
third quarter remained within the Bank of Russia
interest rate band. The range of their fluctuations
somewhat narrowed in the period from July
through September to 1.25-6.67% p.a. from 0.93-
7.40% p.a. in the second quarter.
High liquidity levels in the banking sector and
the ruble’s continued appreciation against the
dollar in nominal terms in the third quarter encour-
aged financial market participants to invest in the
ruble-denominated assets. Interest rates had a
tendency to fall in most segments of the Russian
financial market compared with the second quar-
ter amid the seasonal slowing of inflation.
Interest rates on loans to non-financial en-
terprises fluctuated in the period under review but
were close to those registered at the end of the
previous quarter. There was no single trend in the
dynamics of interest rates on instruments with
different maturity periods. The average quarterly
interest rates on loans with different terms de-
clined relatively evenly. In the third quarter the
average interest rate on short-term loans was
10.3% p.a. and on long-term loans 12.5% p.a., a
fall of 0.4 percentage points from the previous
quarter. (Since April 2006 the calculation of in-
terest rates on loans to non-financial enterprises,
deposits and loans to households includes data
reported by bank branches).
In the conditions of the household growing
demand for loans, the high cost of consumer lend-
ing and the increased risk assumed by creditors
due to the expansion of the range of borrowers,
banks charge higher interest on loans to house-
holds than on loans to enterprises. At the same
time, growing competition between creditors
leads to the reduction in the cost of long-term
credit to households. In the period under review
the average monthly short- and long-term inter-
est rates fluctuated in the range of 0.2 percent-
age points to 0.9 percentage points. In the third
quarter the average interest rate on loans to
households with terms of up to one year rose by
1.2 percentage points quarter on quarter and stood
at 19.4% p.a., whereas the average interest rate
on loans with terms longer than one year fell by
1.2 percentage points to 16.1% p.a. The most sig-
nificant decline was registered in interest rates on
loans with terms longer than three years: they
dropped by 1.6 percentage points to 15.7% p.a.)
2006 Q3
Interest rates on household deposits fluc-
tuated moderately in the third quarter, coming up
and going down depending on the term. Average
deposit interest rates declined in the third quarter
as compared with the second: interest rates on
deposits with terms of up to one year fell by 0.7
percentage points to 7.2% p.a. and interest rates
on deposits with terms of one year to three years
were down by half a percentage point to 7.2% p.a.
As in the first half of the year, deposits with terms
of six months to one year had the highest interest
rates.
The yield curve illustrating the lending op-
erations by banks (loans to non-financial enter-
prises) retained its rising shape and drooped
slightly only in the segment showing operations
with terms longer than one year. Overall, the in-
clination of the curve became a little less pro-
nounced as the inflationary expectations of mar-
ket participants subsided a little.
The yield on the ruble-denominated govern-
ment bonds in all segments of the market tended
to fall slightly in the third quarter. As a result, the
federal loan bond (OFZ) portfolio effective indi-
cator stood at 6.67% p.a., a decrease of 0.24 per-
centage points from the end of the second quar-
ter. The average quarterly OFZ market portfolio
effective indicator declined by 0.09 percentage
points to 6.82% p.a.
The government bonds yield curve retained
its normal shape in the third quarter, although a
minor drop in yields during the period under re-
view pushed it down slightly. The yield curve in the
up-to-2-years sector became a little less inclined
as the yields on bonds with this maturity period
evened out. The 12-years-plus sector of the yield
curve remained flat due to the small amount of
instruments with this maturity and because it is
impossible to evaluate precisely the risk involved
in investments made for such a long period to
come. The investor assessments of safety and li-
quidity of the ruble-denominated government
bonds with all maturities remained unchanged.
The price volatility of most of the ruble-de-
nominated instruments on the financial market
remained moderate in the third quarter and the
interest rate structure by maturity was relatively
balanced. The yield curves on the key financial in-
struments slid down, retaining their normal shape.
Their inclination changed slightly, indicating that
the inflationary expectations of Russian financial
market participants may have abated a little.
Money
Growth in the monetary aggregate M2
accelerated on an annualised basis in the third
quarter of the year from 43.9% as of July 1, 2006,
to 46.6% as of October 1, 2006. In the period from
July through September M2 growth stood at
9.4%. It was slower than in the second quarter
(15%) due to seasonal factors but faster than in
the third quarter of 2005 (7.4%). In October M2
growth was slightly slower than a year earlier.
Allowing for the lags that have formed by
now, growth in the money supply will affect core
inflation in the next three quarters. Estimates of
21 2006 Q3
Monetary Conditions
1 The gap characterises the part of monetary growth that exceeds the amount necessary to finance the increased volume of
transactions. The expansion of the gap may testify to the inflationary pressure of money supply growth on price dynamics.
core inflation caused by the monetary dynamics
of the previous months show that by the end of
the year core inflation will be close to the projected
target, as the money supply growth rates that had
become established earlier (allowing for the time-
lag of their impact) may maintain the downward
trend of core inflation until the end of the year.
The acceleration of M2 growth registered
since May means that there will be more uncer-
tainty by the beginning of 2007 and, conse-
quently, the next year’s starting conditions will
become worse.
The gap between the rates of growth in M2
and GDP
1, which began to increase in the second
half of 2005, continues to widen. As in the third
quarter of 2005, it increased more significantly as
compared with the previous period. The gap be-
tween the rates of growth in GDP and M2X, a
broader monetary aggregate comprising non-cash
funds of economic agents in foreign currency, in-
creased less in the third quarter due to consider-
ably slower rates of growth in this aggregate. The
gap between the rates of economic growth (GDP
growth) and growth in the money supply (growth
in both M2 and M2X) was wider at the end of the
third quarter of this year than at the end of the
third quarter of 2005. When the effect of this gap
on inflation is evaluated, the dynamics of the ve-
locity of money are significant. In the third quar-
ter of this year the velocity of money, calculated
by the M2 aggregate, declined by 3.3% as against
1.5% in the same period last year. This means that
the tendency towards decline that emerged in the
second half of last year has intensified. As a re-
sult, thanks to the structural changes in the money
supply and a dramatic fall in demand for foreign
exchange in the first three quarters of this year,
the velocity of money decreased more rapidly, a
process reflecting growth in demand for the na-
tional currency and mitigating the inflationary fall-
out of monetary growth.
2006 Q3
The ‘money’ aggregate in the monetary
survey definition, which is similar to the M1 ag-
gregate and includes the most liquid transactional
components of the money supply, reflects the
economic situation and liquidity preferences. In
the third quarter these funds increased and in July-
September the aggregate’s growth rates were
faster than those of the less liquid savings com-
ponents of the money supply (the aggregate
‘quasi-money’). The annualised rates of growth
in the ‘money’ aggregate (increment as compared
with the same period of the previous year) accel-
erated from 42.5% as of July 1, 2006, to 44% as
of October 1, 2006. This increase was attributable
to the expansion of the aggregate’s cash compo-
nent and its non-cash part comprising funds in ac-
counts and demand deposits (their growth in July-
September 2006 was faster than growth in cash).
By October 2006 cash grew by an annualised
37.9%, an increase of 3 percentage points on a
year earlier.
The non-cash component of the aggre-
gate M1 expanded 53.5% as of October 1, 2006,
which represents an increase of 8 percentage
points on the same date last year.
The non-cash component of M1 is com-
prised by 80% of non-financial enterprise funds
and its growth reflects the increasing demand of
economic agents for money, which they need to
conduct transactions and effect payments. The
accelerated dynamics of non-cash transactional
funds are less inflationary than cash dynamics,
because cash has greater potential and shorter lag
of impact on inflationary processes.
Following the seasonal pattern of the past
few years, growth in cash in the third quarter of
this year (7.5%) was slower than in the second
(15.8%) but faster than in the third quarter of
2005 (5.5%). As household real disposable in-
come in January-September 2006 increased faster
than in the same period in 2005, growth in the
monetary aggregate M0 accelerated to 19.5% as
against 13.4% in the same period last year.
The dynamics of household demand for for-
eign exchange had a major effect on M0 dynam-
ics. As the ruble appreciated against the dollar and
23 2006 Q3
Monetary Conditions
the euro, net sales of foreign exchange to house-
holds through banks contracted by more than a
half in January-September 2006 as compared with
the same period last year. It was the biggest re-
duction in net sales of foreign exchange to house-
holds since 2000.
At the end of the third quarter of the year,
the rate of growth in cash, as compared with the
same period in 2005, was slower than that of M2
(37.9% as against 46.6%) but faster than it was
on October 1, 2005 (34.6%). Cash accounted for
30.9% of M2 as of October 1, 2006, as against
32.9% a year earlier. These structural changes in
the ruble supply may somewhat mitigate the im-
pact of money supply growth on inflation.
The aggregate ‘quasi-money’ increased
less than the aggregate ‘money’ in the third quar-
ter of the year. ‘Quasi-money’ comprises less liq-
uid components of the money supply, used by
economic agents as savings. In the period from
July through September 2006 ‘quasi-money’ in-
creased 5.6% and its annualised growth slowed
to 30.9% (as of July 1, 2006, it grew 33.2% and
as of October 1, 2005, 39%).
Growth in ‘quasi-money’ in July-September
was due to the expansion of the ruble compo-
nent: time deposits increased 10.9% over the pe-
riod and their annualised growth accelerated by 4
percentage points to 50.7% as of October 1, 2006.
The ruble-denominated time deposits grew faster
than in the same period last year (46.5% as of
October 1, 2005). These dynamics of time depos-
its denominated in the national currency are very
important from the viewpoint of the lessening of
the inflationary consequences of money supply
growth.
Foreign currency-denominated deposits,
the foreign currency component of ‘quasi-
money,’ decreased 5% in the third quarter as a
result of the corresponding dynamics of house-
hold deposits. Annualised growth of foreign cur-
rency deposits (increment against growth regis-
tered on the same date of the previous year)
slowed to 5% as of October 1, 2006, as against
31.3% a year earlier and lagged far behind the
dynamics of the ruble-denominated time depos-
its.
One reason for the difference in the dynam-
ics of the monetary aggregates is the back-and-
forth movement of rubles and foreign currency,
caused by the fluctuations in demand for the na-
tional and foreign currency. As a result of the sig-
nificant fall in demand for foreign exchange in the
third quarter of the year, the annual rates of
growth in the ruble aggregates accelerated con-
siderably more than the aggregate comprising
foreign currency deposits, M2X. Moreover, the
rates of growth in all ruble aggregates in the third
quarter of this year were faster than in the same
period last year. The annualised rates of growth
(relative to growth rates on the same date of the
previous year) in the aggregate M2X, which com-
prises non-cash foreign currency assets of eco-
nomic agents, stood at 37.8% as of October 1,
2006, as against 39.3% a year earlier.
2006 Q3
The rate of dollarisation (the share of the
foreign currency component in the money supply
in the monetary survey definition) decreased in the
first three quarters of the year by 3.4 percentage
points, to 13% from 16.3% (in the same period
last year it increased by 0.4 percentage points) and
the ruble component of ‘quasi-money’ continued
to predominate in the M2X structure (it accounted
for 32.5% as of October 1, 2006, as against 29.7%
a year earlier).
The non-cash component of the aggregate
M2X, which comprises enterprise and household
funds raised by banks in rubles and foreign cur-
rency and is the main source of growth in lending
volume, increased more slowly (by 37.7% as of
October 1, 2006, as compared with the same date
a year earlier) than credit to the non-financial en-
terprises and households (which grew by an
annualised 45.2% as of October 1, 2006). At the
same time, growth in banking sector claims on
non-financial enterprises and households (by
almost 729 billion rubles) in the third quarter of
the year far surpassed growth in the third quarter
of 2005 and was higher than second-quarter
growth, due in part to seasonal factors. Thus, the
importance of banking sector credit to non-finan-
cial enterprises and households as a source of
growth in the aggregate money supply increased
significantly in the third quarter of the year.
The broad monetary base expanded 6%
in the third quarter of this year as against 10.3%
in the same period in 2005. The share of credit in-
stitutions’ correspondent accounts with the Bank
of Russia was virtually unchanged in July-Septem-
ber 2006 at about 13% of broad money (in the
third quarter of 2005 it expanded from 12% to
14.7%). The share of banking sector funds ab-
sorbed by the Bank of Russia by taking them on
deposit and OBR operations contracted slightly in
the third quarter (from 8.3% to 7.7%), but it was
considerably larger than in the same period in 2005
(as of October 1, 2005, it stood at 6.0%). There
was also a slight contraction (by half a percent-
age point to 13.6%) in the share of absorbed
funds, including banks’ required reserves (in the
third quarter of 2005 it expanded from 11.5% to
11.9%).
25 2006 Q3
Monetary Conditions
The accumulation of vast amounts of funds
in general government accounts, resulting above
all from the expansion of the Stabilisation Fund,
had a restraining effect on money supply growth
in January-September 2006. High oil prices in the
world in that period ensured significant growth in
the Stabilisation Fund, which increased by 1,266.1
billion rubles in January-September 2006. In the
third quarter of this year the Stabilisation Fund,
comprised of rubles and foreign currency, de-
creased due to the early payment of Russia’s debt
to the Paris Club of creditor nations and as of Oc-
tober 1, 2006, it equalled 1,894.1 billion rubles.
2006 Q3
Statistical Addendum
Consumer prices by group of goods and services
(month on month, %)
Monthly
inflation
Core
inflation
Food price
growth
Growth in food
prices, excluding
vegetable prices
Vegetable and
fruit price growth
Non-food price
growth
Growth in
non-food prices,
excluding petrol
prices*
Service price
growth
January 1.8 0.9 1.6 1.3 5.5 0.5 0.5 4.1
February 1.0 0.8 1.1 1.1 1.5 0.4 0.4 1.6
March 0.8 0.7 1.1 0.9 2.8 0.4 0.5 0.6
April 1.0 0.8 0.8 1.0 -0.6 0.6 0.5 2.0
May 0.7 0.6 0.4 0.5 -0.7 0.8 0.6 1.4
June 0.8 0.5 0.8 0.4 4.8 0.7 0.4 0.9
July 0.9 0.8 1.0 1.0 1.5 0.6 0.4 1.3
August 0.4 0.7 0.1 0.8 -6.3 0.5 0.5 1.0
September 0.4 0.9 0.0 0.9 -9.0 0.9 0.6 0.6
October 1.1 1.3 1.4 1.7 -2.7 0.7 0.7 1.2
November 1.1 1.1 1.5 1.5 2.2 0.7 0.5 0.8
December 1.1 1.0 1.7 1.4 5.4 0.4 0.5 1.0
Full year (December
on December)
11.7 10.5 12.3 13.1 3.3 7.4 6.2 17.7
January 2.6 0.9 1.4 1.1 5.1 0.4 0.5 8.8
February 1.2 0.7 1.4 0.9 6.1 0.4 0.4 2.2
March 1.3 0.8 2.1 1.1 11.2 0.4 0.4 1.2
April 1.1 0.9 1.7 1.3 5.4 0.5 0.4 0.8
May 0.8 0.6 1.1 0.7 4.1 0.4 0.4 0.8
June 0.6 0.5 0.7 0.4 3.3 0.3 0.3 0.9
July 0.5 0.5 0.3 0.5 -1.8 0.4 0.4 0.9
August -0.1 0.5 -1.0 0.5 -12.9 0.5 0.4 0.8
September 0.3 0.8 -0.7 0.6 -11.6 1.1 0.8 0.9
October 0.6 0.7 0.4 0.6 -2.4 0.7 0.7 0.7
November 0.7 0.6 0.9 0.6 4.5 0.6 0.6 0.6
December 0.8 0.6 1.1 0.6 5.6 0.5 0.5 0.8
Full year (December
on December)
10.9 8.3 9.6 9.1 14.3 6.4 6.0 21.0
January 2.4 0.8 2.0 1.0 11.3 0.4 0.5 6.2
February 1.7 1.2 3.0 1.9 12.6 0.5 0.5 1.0
March 0.8 0.7 1.2 0.9 3.2 0.4 0.4 0.7
April 0.4 0.4 0.3 0.3 -0.3 0.3 0.3 0.6
May 0.5 0.4 0.5 0.2 2.6 0.4 0.4 0.6
June 0.3 0.3 0.0 0.1 -0.6 0.3 0.3 0.7
July 0.7 0.5 0.9 0.7 2.7 0.4 0.3 0.6
August 0.2 0.6 -0.5 0.7 -10.0 0.8 0.5 0.8
September 0.1 0.8 -0.6 0.6 -11.0 0.8 0.6 0.5
* Beginning from March 2005: Bank of Russia estimate.
27 2006 Q3
Statistical Addendum
Consumer prices by group of goods and services
(since start of year on accrual basis, %)
Monthly
inflation
Core
inflation
Food price
growth
Growth in food
prices, excluding
vegetable prices
Vegetable and
fruit price growth
Non-food price
growth
Growth in
non-food prices,
excluding petrol
prices*
Service price
growth
January 1.8 0.9 1.6 1.3 5.5 0.5 0.5 4.1
February 2.8 1.7 2.8 2.3 7.1 0.9 0.9 5.8
March 3.5 2.4 3.8 3.2 10.1 1.4 1.4 6.4
April 4.6 3.2 4.7 4.2 9.5 2.0 1.9 8.5
May 5.3 3.8 5.2 4.8 8.7 2.8 2.5 10.0
June 6.1 4.3 6.0 5.2 13.9 3.4 2.9 11.0
July 7.1 5.1 7.1 6.2 15.6 4.0 3.3 12.5
August 7.6 5.8 7.2 7.1 8.3 4.6 3.8 13.6
September 8.0 6.8 7.2 8.0 -1.4 5.5 4.4 14.3
October 9.3 8.1 8.7 9.9 -4.0 6.3 5.2 15.7
November 10.5 9.3 10.4 11.5 -1.9 7.0 5.7 16.6
December 11.7 10.5 12.3 13.1 3.3 7.4 6.2 17.7
January 2.6 0.9 1.4 1.1 5.1 0.4 0.5 8.8
February 3.9 1.7 2.8 2.0 11.5 0.7 0.9 11.2
March 5.3 2.4 4.9 3.1 24.0 1.1 1.2 12.6
April 6.5 3.3 6.7 4.4 30.8 1.6 1.6 13.5
May 7.3 4.0 7.9 5.1 36.1 2.1 2.0 14.4
June 8.0 4.4 8.6 5.5 40.6 2.4 2.4 15.4
July 8.5 5.0 8.9 6.1 38.0 2.8 2.8 16.5
August 8.3 5.5 7.8 6.6 20.2 3.4 3.2 17.4
September 8.6 6.3 7.1 7.2 6.2 4.5 4.1 18.5
October 9.2 7.1 7.5 7.8 3.6 5.2 4.8 19.3
November 10.0 7.7 8.4 8.4 8.3 5.9 5.5 20.0
December 10.9 8.3 9.6 9.1 14.3 6.4 6.0 21.0
January 2.4 0.8 2.0 1.0 11.3 0.4 0.5 6.2
February 4.1 2.0 5.0 2.9 25.3 0.9 0.9 7.2
March 5.0 2.8 6.2 3.9 29.3 1.3 1.3 8.0
April 5.4 3.2 6.5 4.2 28.9 1.6 1.6 8.6
May 5.9 3.6 7.0 4.4 32.3 2.0 2.0 9.3
June 6.2 3.9 7.0 4.5 31.5 2.3 2.3 10.0
July 6.9 4.5 8.0 5.2 35.0 2.7 2.7 10.7
August 7.1 5.1 7.4 6.0 21.6 3.5 3.2 11.5
September 7.2 5.9 6.7 6.6 8.2 4.3 3.8 12.0
* Beginning from March 2005: Bank of Russia estimate.
2006 Q3
Consumer prices by group of goods and services
(month on month of previous year, %)
Monthly
inflation
Core
inflation*
Food price
growth*
Growth in food
prices, excluding
vegetable prices*
Vegetable and
fruit price growth
Non-food price
growth*
Growth in
non-food prices,
excluding petrol
prices*
Service price
growth*
January 11.3 11.0 9.2 11.7 -10.7 8.6 8.4 21.9
February 10.6 10.8 9.2 12.0 -12.9 8.0 8.0 18.9
March 10.3 10.8 9.2 12.2 -13.8 7.6 7.7 17.5
April 10.2 11.0 9.1 12.7 -17.8 7.6 7.5 17.8
May 10.2 11.0 8.9 12.9 -20.4 7.8 7.4 17.7
June 10.1 10.9 8.8 12.6 -18.4 7.9 7.2 17.4
July 10.4 11.0 9.5 12.9 -15.7 8.0 7.1 16.7
August 11.3 10.9 11.1 12.9 -4.6 8.0 7.1 17.0
September 11.4 10.7 11.3 12.7 -2.2 8.1 6.9 16.8
October 11.5 10.5 11.7 12.7 0.9 7.8 6.7 17.3
November 11.7 10.4 12.0 12.9 2.0 7.6 6.3 17.7
December 11.7 10.5 12.3 13.1 3.3 7.4 6.2 17.7
January 12.7 10.4 12.1 12.9 3.0 7.3 6.2 23.1
February 13.0 10.4 12.4 12.6 7.6 7.2 6.2 23.8
March 13.6 10.5 13.5 12.9 16.4 7.1 6.1 24.6
April 13.8 10.6 14.5 13.2 23.4 7.0 6.0 23.1
May 13.8 10.6 15.2 13.3 29.3 6.6 5.8 22.4
June 13.7 10.6 15.1 13.4 27.5 6.3 5.7 22.4
July 13.2 10.3 14.2 12.9 23.4 6.2 5.7 21.9
August 12.5 10.1 12.9 12.5 14.7 6.1 5.7 21.6
September 12.3 10.0 12.1 12.1 11.3 6.3 5.9 22.0
October 11.7 9.4 11.0 10.9 11.6 6.3 5.9 21.4
November 11.3 8.9 10.3 9.9 14.1 6.3 6.1 21.2
December 10.9 8.3 9.6 9.1 14.3 6.4 6.1 21.0
January 10.7 8.2 10.2 9.1 21.1 6.5 6.0 18.1
February 11.2 8.7 11.9 10.1 28.4 6.6 6.1 16.7
March 10.6 8.7 10.9 10.0 19.2 6.7 6.1 16.1
April 9.8 8.2 9.4 9.0 12.7 6.4 6.0 15.9
May 9.4 7.9 8.7 8.5 11.1 6.4 6.0 15.6
June 9.0 7.8 8.0 8.1 7.0 6.4 6.0 15.3
July 9.3 7.8 8.7 8.3 11.9 6.3 5.9 15.0
August 9.6 7.9 9.2 8.5 15.6 6.6 6.0 15.0
September 9.5 7.9 9.3 8.5 16.4 6.2 5.8 14.5
* Bank of Russia estimate.
29 2006 Q3
Statistical Addendum
Inflation Growth Structure (percentage points)
Inflation growth over period since start of year due
to price changes by group of goods and services
Foodstuffs* Non-food
products Paid services Vegetables and
fruit
Inflation over
period, % Core inflation Non-core
inflation**
January 0.6 0.2 0.8 0.2 1.8 0.8 1.0
February 1.1 0.3 1.1 0.3 2.8 1.4 1.4
March 1.5 0.4 1.2 0.4 3.5 2.0 1.6
April 2.0 0.6 1.5 0.4 4.6 2.6 1.9
May 2.2 0.8 1.8 0.4 5.3 3.1 2.2
June 2.4 1.0 2.0 0.6 6.1 3.5 2.6
July 2.9 1.2 2.3 0.7 7.1 4.2 2.9
August 3.3 1.4 2.5 0.4 7.6 4.7 2.8
September 3.8 1.7 2.6 -0.1 8.0 5.5 2.5
October 4.6 1.9 2.9 -0.2 9.3 6.6 2.7
November 5.4 2.1 3.0 -0.1 10.5 7.6 2.9
December 6.1 2.3 3.2 0.1 11.7 8.5 3.3
January 0.4 0.1 1.8 0.2 2.6 0.7 1.9
February 0.8 0.2 2.3 0.5 3.9 1.3 2.6
March 1.3 0.4 2.6 1.0 5.3 1.9 3.3
April 1.9 0.5 2.8 1.3 6.5 2.7 3.8
May 2.1 0.7 3.0 1.5 7.3 3.1 4.1
June 2.3 0.8 3.2 1.7 8.0 3.5 4.5
July 2.5 0.9 3.4 1.6 8.5 3.9 4.5
August 2.8 1.1 3.6 0.8 8.3 4.4 4.0
September 3.0 1.5 3.9 0.3 8.6 5.0 3.6
October 3.3 1.7 4.0 0.1 9.2 5.6 3.6
November 3.6 1.9 4.2 0.3 10.0 6.1 3.9
December 3.8 2.1 4.4 0.6 10.9 6.6 4.3
January 0.4 0.2 1.5 0.4 2.4 0.6 1.8
February 1.1 0.3 1.7 1.0 4.1 1.5 2.6
March 1.5 0.5 1.9 1.2 5.0 2.1 2.9
April 1.6 0.6 2.0 1.1 5.4 2.5 2.9
May 1.7 0.7 2.2 1.3 5.9 2.7 3.1
June 1.8 0.8 2.4 1.2 6.2 3.0 3.2
July 2.0 0.9 2.5 1.4 6.9 3.4 3.5
August 2.3 1.2 2.7 0.9 7.1 3.9 3.2
September 2.6 1.5 2.9 0.3 7.2 4.6 2.6
* Excluding vegetables and fruit.
** Growth in prices of goods and paid services not included in calculation of core consumer price index.
2006 Q3
Monthly inflation growth due to price changes
by group of goods and services
Foodstuffs* Non-food
products Paid services Vegetables and
fruit
Inflation over
period, % Core inflation Non-core
inflation**
January 0.6 0.2 0.8 0.2 1.8 0.8 1.0
February 0.5 0.1 0.3 0.1 1.0 0.6 0.4
March 0.4 0.1 0.1 0.1 0.8 0.6 0.2
April 0.4 0.2 0.4 0.0 1.0 0.6 0.3
May 0.2 0.2 0.3 0.0 0.7 0.5 0.2
June 0.2 0.2 0.2 0.2 0.8 0.4 0.4
July 0.4 0.2 0.3 0.1 0.9 0.6 0.3
August 0.4 0.2 0.2 -0.3 0.4 0.5 -0.1
September 0.4 0.3 0.1 -0.4 0.4 0.7 -0.3
October 0.8 0.2 0.2 -0.1 1.1 1.0 0.2
November 0.7 0.2 0.2 0.1 1.1 0.9 0.2
December 0.6 0.1 0.2 0.2 1.1 0.8 0.3
January 0.4 0.1 1.8 0.2 2.6 0.7 1.9
February 0.4 0.1 0.5 0.3 1.2 0.6 0.7
March 0.5 0.1 0.3 0.5 1.3 0.6 0.7
April 0.5 0.2 0.2 0.3 1.1 0.7 0.4
May 0.3 0.1 0.2 0.2 0.8 0.5 0.3
June 0.2 0.1 0.2 0.2 0.6 0.4 0.3
July 0.2 0.1 0.2 -0.1 0.5 0.4 0.1
August 0.2 0.2 0.2 -0.6 -0.1 0.4 -0.5
September 0.2 0.4 0.2 -0.6 0.3 0.6 -0.4
October 0.3 0.2 0.2 -0.1 0.6 0.5 0.0
November 0.2 0.2 0.1 0.2 0.7 0.5 0.3
December 0.3 0.1 0.2 0.2 0.8 0.4 0.4
January 0.4 0.2 1.5 0.4 2.4 0.6 1.8
February 0.7 0.2 0.2 0.5 1.7 0.9 0.7
March 0.4 0.1 0.2 0.2 0.8 0.6 0.3
April 0.1 0.1 0.1 0.0 0.4 0.3 0.0
May 0.1 0.1 0.1 0.1 0.5 0.3 0.2
June 0.0 0.1 0.2 0.0 0.3 0.2 0.1
July 0.3 0.1 0.2 0.1 0.7 0.4 0.3
August 0.3 0.2 0.2 -0.5 0.2 0.5 -0.3
September 0.2 0.3 0.1 -0.5 0.1 0.6 -0.5
* Excluding vegetables and fruit.
** Growth in prices of goods and paid services not included in calculation of core consumer price index.
31 2006 Q3
Statistical Addendum
Contribution to Inflation Growth (%)
Contribution to inflation growth over period since start of year
by group of goods and services
Foodstuffs* Non-food products Paid services Vegetables and fruit Core inflation Non-core inflation**
January 33.8 8.6 43.5 14.0 43.2 56.8
February 40.0 10.2 38.3 11.5 50.0 50.0
March 42.9 11.7 32.8 12.7 55.3 44.7
April 43.5 13.3 34.0 9.2 57.5 42.5
May 42.4 15.9 34.4 7.3 58.5 41.5
June 39.8 17.2 32.9 10.1 57.2 42.8
July 40.9 17.3 32.1 9.8 58.8 41.2
August 43.8 18.4 32.8 4.9 62.6 37.4
September 47.0 21.1 32.7 -0.8 68.4 31.6
October 50.2 20.8 31.0 -1.9 70.9 29.1
November 51.5 20.4 28.9 -0.8 72.0 28.0
December 52.1 19.2 27.5 1.2 72.0 28.0
January 17.0 4.8 70.2 8.0 27.1 72.9
February 21.2 6.2 60.4 12.1 33.4 66.6
March 24.5 6.8 50.0 18.7 36.7 63.3
April 28.6 8.1 43.8 19.5 41.1 58.9
May 29.3 9.2 41.2 20.2 43.1 56.9
June 29.0 9.8 40.5 20.8 44.1 55.9
July 30.1 10.9 40.7 18.3 46.5 53.5
August 33.2 13.2 43.6 9.9 52.3 47.7
September 35.1 17.1 44.9 3.0 58.3 41.7
October 35.9 18.6 43.9 1.6 60.9 39.1
November 35.6 19.2 41.8 3.4 61.1 38.9
December 35.2 19.2 40.3 5.4 60.5 39.5
January 16.0 6.1 59.5 18.3 24.5 75.5
February 27.2 7.7 40.9 24.1 37.2 62.8
March 30.1 9.1 37.6 23.2 42.4 57.6
April 30.5 10.3 37.9 21.3 45.7 54.3
May 29.3 11.8 37.2 21.8 46.7 53.3
June 28.6 12.9 38.3 20.2 48.4 51.6
July 29.6 13.5 36.7 20.2 49.7 50.3
August 32.7 16.8 38.5 12.1 55.4 44.6
September 35.7 20.2 39.6 4.5 63.4 36.6
* Excluding vegetables and fruit.
** Growth in prices of goods and paid services not included in calculation of core consumer price index.
2006 Q3
Contribution to monthly inflation growth
by group of goods and services
Foodstuffs* Non-food products Paid services Vegetables and fruit Core inflation Non-core inflation**
January 33.8 8.6 43.5 14.0 43.2 56.8
February 50.7 13.1 29.1 7.1 61.8 38.2
March 52.8 17.0 13.3 16.9 74.2 25.8
April 45.7 19.0 38.2 -2.9 65.1 34.9
May 35.7 32.6 36.6 -4.9 64.9 35.1
June 22.1 25.8 23.1 29.1 48.2 51.8
July 47.5 17.6 27.3 7.5 68.1 31.9
August 89.6 37.7 44.9 -72.2 122.3 -22.3
September 100.3 67.0 30.2 -97.5 164.9 -64.9
October 70.5 18.9 20.3 -9.7 86.8 13.2
November 60.7 18.0 13.8 7.5 79.4 20.6
December 55.8 9.0 15.5 19.7 71.7 28.3
January 17.0 4.8 70.2 8.0 27.1 72.9
February 30.0 9.2 40.0 20.8 46.5 53.5
March 33.6 8.4 20.9 37.0 46.1 53.9
April 46.7 14.1 15.8 23.4 60.9 39.1
May 34.9 18.4 20.6 26.1 60.1 39.9
June 25.7 15.5 32.1 26.6 54.6 45.4
July 48.4 29.6 43.6 -21.6 86.0 14.0
August estimate can't be made for negative value
September 92.7 141.5 83.9 -218.1 243.9 -143.9
October 47.2 40.9 29.7 -17.8 96.4 3.6
November 31.6 26.1 18.2 24.1 63.1 36.9
December 31.0 18.8 22.1 28.1 53.5 46.5
January 16.0 6.1 59.5 18.3 24.5 75.5
February 43.4 10.0 14.0 32.6 55.8 44.2
March 43.9 15.8 21.6 18.7 67.5 32.5
April 35.8 27.0 41.3 -4.2 90.9 9.1
May 16.1 27.6 29.9 26.4 57.3 42.7
June 15.3 34.9 59.7 -10.0 81.6 18.4
July 37.6 19.0 23.4 20.0 60.9 39.1
August 140.5 132.4 97.9 -270.7 249.5 -149.5
September 269.8 290.1 128.8 -588.7 678.9 -578.9
* Excluding vegetables and fruit.
** Growth in prices of goods and paid services not included in calculation of core consumer price index.
33 2006 Q3
Statistical Addendum
Major monetary indicators
in 2005-2006
2005 2006
1.01 1.04 1.07 1.08 1.09 1.10 1.01 1.04 1.07 1.08 1.09 1.10
Cash (M0), billion rubles 1,534.8 1,481.7 1,650.7 1,701.8 1,703.3 1,740.7 2,009.2 1,928.8 2,233.4 2,290.3 2,351.6 2,400.8
monthly rates of growth, % 15.2 2.6 4.3 3.1 0.1 2.2 13.8 2.0 6.5 2.5 2.7 2.1
rates of growth since start of year, % -3.5 7.6 10.9 11.0 13.4 30.9 -4.0 11.2 14.0 17.0 19.5
share in M2 structure, % 35.2 33.1 33.5 34.1 33.2 32.9 33.2 31.3 31.5 31.7 31.6 30.9
Non-cash funds (M2-M0), billion rubles 2,828.5 2,992.9 3,276.7 3,283.9 3,432.7 3,552.1 4,036.3 4,240.6 4,858.9 4,940.4 5,097.6 5,356.7
monthly rates of growth, % 8.5 4.4 5.5 0.2 4.5 3.5 10.0 5.2 5.7 1.7 3.2 5.1
rates of growth since start of year, % 5.8 15.8 16.1 21.4 25.6 42.7 5.1 20.4 22.4 26.3 32.7
M2 monetary aggregate, billion rubles 4,363.3 4,474.6 4,927.4 4,985.8 5,136.0 5,292.8 6,045.6 6,169.4 7,092.3 7,230.7 7,449.3 7,757.5
monthly rates of growth, % 10.7 3.8 5.1 1.2 3.0 3.1 11.2 4.2 6.0 2.0 3.0 4.1
rates of growth since start of year, % 2.6 12.9 14.3 17.7 21.3 38.6 2.0 17.3 19.6 23.2 28.3
rates of growth (month on month of previous year, %) 35.8 30.8 33.6 37.2 40.4 42.0 38.6 37.9 43.9 45.0 45.0 46.6
foreign currency deposits, billion rubles 935.1 1,024.9 1,090.6 1,101.5 1,154.4 1,167.9 1,178.2 1,225.9 1,221.0 1,184.2 1,129.8 1,153.2
monthly rates of growth, % 0.9 -0.8 3.4 1.0 4.8 1.2 0.6 -1.0 2.4 -3.0 -4.6 2.1
rates of growth since start of year, % 9.6 16.6 17.8 23.5 24.9 26.0 4.1 3.6 0.5 -4.1 -2.1
share in money supply structure by monetary survey
methodology, %
17.6 18.6 18.1 18.1 18.4 18.1 16.3 16.6 14.7 14.1 13.2 13.0
Money supply by monetary survey methodology,
billion rubles
5,298.7 5,499.6 6,015.9 6,087.4 6,286.5 6,458.4 7,221.1 7,392.9 8,304.8 8,407.9 8,570.4 8,897.2
monthly rates of growth, % 8.9 2.9 4.8 1.2 3.3 2.7 9.3 3.3 5.4 1.2 1.9 3.8
rates of growth since start of year, % 3.8 13.5 14.9 18.6 21.9 36.3 2.4 15.0 16.4 18.7 23.2
M2 velocity (annualised average) 4.7 4.6 4.6 4.6 4.5 4.5 4.4 4.3 4.2 4.1 4.1 4.0
change since start of year, % -1.3 -2.7 -3.0 -3.5 -4.1 -6.1 -1.7 -4.9 -6.0 -7.0 -8.0
Monetisation (by M2 aggregate), % 21.3 21.6 21.9 22.0 22.1 22.2 22.7 23.1 23.9 24.1 24.4 24.7
Broad monetary base, billion rubles 2,380.3 2,250.1 2,302.8 2,341.9 2,417.4 2,538.9 2,914.1 2,721.0 3,285.9 3,305.0 3,482.2 3,484.2
monthly rates of growth, % 14.3 -0.4 1.8 1.7 3.2 5.0 15.3 2.3 1.3 0.6 5.4 0.1
rates of growth on accrual basis, % -5.5 -3.3 -1.6 1.6 6.7 22.4 -6.6 12.8 13.4 19.5 19.6
Multiplier (by broad monetary base) 1.83 1.99 2.14 2.13 2.12 2.08 2.07 2.27 2.16 2.19 2.14 2.23
change since start of year, % 8.5 16.7 16.1 15.9 13.7 13.2 9.3 4.0 5.5 3.1 7.3
2006 Q3
35 2006 Q3
Statistical Addendum
2006 Q3
37 2006 Q3
Statistical Addendum
2006 Q3
39 2006 Q3
Statistical Addendum
© The Central Bank of the Russian Federation, 2007
Research and Information Department