CBR Quarterly Inflation Review - Q1 2008
Central bank: cbr | Type: quarterly_review | Date: 2008-03-31

THE CENTRAL BANK
OF THE RUSSIAN FEDERATION
(BANK OF RUSSIA)
Quarterly
Inflation
Review
2008 Q1
Research and Information Department
The electronic version of Quarterly Inflation Review is available on the Bank of Russia's website :

Quarterly Inflation Review currently issued by the Bank of Russia's Research and Information
Department is a document primarily aimed at analysing the latest consumer price trends. Inflation
surveys published in countries implementing inflation targeting offer projected inflation estimates to
study potential inflation deviation from the target, analyse the reasons for such deviation and outline
the central bank's measures to steer inflation towards the target. The Research and Information
Department carries out work to develop an analysis and forecast system similar to those used by
central banks implementing inflation targeting. As the methods of analysis and forecast improve,
quarterly inflation reviews will be expanded and complemented with respective sections.
Contents
Introduction ............................................................................................................... 3
Inflation Dynamics ...................................................................................................... 4
Consumer prices ............................................................................................................................ 4
Housing prices ............................................................................................................................... 6
Producer prices ............................................................................................................................. 7
Inflation in some countries of the world ............................................................................................ 8
Foreign trade ................................................................................................................................. 9
Foreign trade in some countries .....................................................................................................11
Demand .......................................................................................................................................11
Supply ......................................................................................................................................... 14
Labour market ............................................................................................................................. 14
Monetary Conditions ................................................................................................. 16
Exchange rate ............................................................................................................................... 16
Interest rates ................................................................................................................................17
Asset prices ..................................................................................................................................21
Monetary aggregates ....................................................................................................................23
Credit aggregates .........................................................................................................................25
Statistical Addendum ................................................................................................ 28
32008 Q1
Inflation Dynamics
Consumer price growth accelerated in Rus-
sia in January-March 2008. Core inflation in-
creased, and the prices of goods and services not
included in the official calculation of the core con-
sumer price index grew faster . Consumer prices
increased 4.8% in the first quarter of 2008 as
against 3.4% in the same period of 2007. The
faster consumer price growth was largely attribut-
able to the acceleration of growth in food prices
and the prices of paid services provided to house-
holds. Food prices, excluding vegetable and fruit
prices, increased 4.0% in January-March 2008
while vegetable and fruit prices grew 20.6%,
which actually corresponds to the average annual
vegetable and fruit price growth in 2001-2007.
Service prices grew 7.5% or slightly slower than in
the same period last year; however , the negative
effect of growth in service prices on inflation re-
mained considerable.
As growth in consumer prices accelerated,
the Bank of Russia took measures to tighten mon-
etary conditions for the economy. The Bank of Rus-
sia started gradually to raise interest rates to re-
strain inflation and make money supply grow
slower . This move was also aimed at reducing in-
flationary expectations of market participants. The
refinance rate and some other interest rates on
Bank of Russia operations were raised by 0.25%
in February. Another rise in interest rates took place
in April. Higher required reserve ratios for credit
Introduction
institutions' liabilities in force since March 1 (after
their temporary reduction in November 2007),
along with an increase in the averaging ratio, also
contributed to slower growth in money supply.
As the conditions for foreign borrowings
deteriorated, the Bank of Russia took active mea-
sures to provide liquidity to credit institutions, in-
creasing the volume of refinancing. At the same
time, large volumes of operations to absorb liquid-
ity and low money market rates were evidence of
the banking sector's sufficient liquidity in the first
quarter. The Bank of Russia interest rate band re-
mained unchanged, whereas the range of MIACR
fluctuations increased, while the average quarterly
MIACR on overnight ruble loans was lower in the
first quarter of 2008 than in the previous quarter.
Banks' interest rates on deposits and loans in-
creased in the first quarter but had no marked ef-
fect on credit aggregates dynamics.
Growth in monetary aggregates slowed
down amid a significant decrease in Bank of Rus-
sia currency interventions due to a net outflow of
capital from the private sector in the first quarter.
Monetary aggregate M2 grew slower from the
second half of 2007 partly due to deceleration in
the growth of demand for the national currency.
However , money supply continued to grow rapidly.
Positive monetary gaps suggest that inflation risks
posed by money supply will persist in the medium
and long term.
2008 Q1
Consumer price inflation (%)
Growth (March 2008 on
December 2007)
Growth (March 2007 on
December 2006)
Prices of goods and services, total 4.8 3.4 Acceleration of growth by
1.4 percentage points
of which:
- food prices 5.7 2.6 Acceleration of growth by
3.1 percentage points
- food prices, excluding vegetable and fruit prices 4.0 1.7 Acceleration of growth by
2.3 percentage points
- non-food prices 2.0 1.1 Acceleration of growth by
0.9 percentage points
- prices of paid services provided to households 7.5 8.0 Slowing of growth by 0.5
percentage points
Prices of goods and services included in core inflation calculation : 3.2 1.7 Acceleration of growth by
1.5 percentage points
Source: Rosstat.
Inflation Dynamics
Consumer prices
According to the Federal State Statistics Ser-
vice (Rosstat), consumer prices rose 4.8% in Janu-
ary-March 2008 as against 3.4% in the same pe-
riod of 2007. Consumer prices grew 13.3% in
March 2008 and 12.9% in the first quarter of
2008, year on year.
Core inflation equalled 3.2% in the first
quarter of 2008 as against 1.7% in the first quar-
ter of 2007 and an estimated 12.7% in March
2008 as compared with March 2007.
Growth in the prices of goods and services
included in the calculation of the core consumer
price index accounted for an estimated 2.5 per-
centage points, or 52.7%, of overall consumer
price growth in the first quarter of 2008 as against
1.3 percentage points, or 38.3%, in January-
March 2007.
Growth in the prices of foodstuffs and paid
services provided to households made the princi-
pal contribution to the acceleration of inflation.
Food prices grew 5.7% in the first quarter of 2008
as against 2.6% in the first quarter of 2007.
Food prices, excluding vegetable and
fruit prices, grew 4.0% in January-March 2008
as against 1.7% in January-March 2007, and this
52008 Q1
Inflation Dynamics
Food price inflation (%)
Growth (March 2008 on
December 2007)
Growth (March 2007 on
December 2006)
Food products 5.7 2.6 Acceleration of growth by 3.1 percentage points
Bread and bakery products 8.3 2.2 Acceleration of growth by 6.1 percentage points
Cereals and legumes 5.0 4.5 Acceleration of growth by 0.5 percentage points
Pasta 10.1 1.8 Acceleration of growth by 8.3 percentage points
Meat and poultry 2.6 0.9 Acceleration of growth by 1.7 percentage points
Fish and seafood 2.4 3.3 Slowing of growth by 0.9 percentage points
Milk and dairy products 5.5 1.9 Acceleration of growth by 3.6 percentage points
Butter 4.6 1.9 Acceleration of growth by 2.7 percentage points
Sunflower oil 6.6 0.1 Acceleration of growth by 6.5 percentage points
Granulated sugar 7.8 -4.9
Vegetables and fruit 20.6 11.2 Acceleration of growth by 9.4 percentage points
Alcoholic beverages 3.0 2.0 Acceleration of growth by 1.0 percentage points
Source: Rosstat.
growth accounted for an estimated 1.4 percent-
age points, or 29.7%, of overall consumer price
growth in the first quarter of 2008 as against 0.6
percentage points, or 17.8%, in the first quarter
of 2007.
The prices of most basic food products grew
considerably faster in January-March 2008 than
in January-March 2007. In particular , the prices of
bread and bakery products increased 8.3% in the
first quarter of 2008 as against 2.2% in the same
period a year earlier while pasta prices went up
10.1% (1.8% in the first quarter of 2007). The
prices of these food products grew amid grain in-
terventions carried out by the government on the
domestic market from late October 2007 and the
persistence of high export duties on grain.
World food prices were registered to grow
in January-March 2008. The prices of wheat in-
creased 19% and maize 29% on the US market in
March 2008 on December 2007 while rice prices
in Thailand soared 56%.
The prices of milk and dairy products went
up 5.5% in January-March 2008 as against 1.9%
in January-March 2007, while the price of butter
grew 4.6% (1.9% in the first quarter of 2007),
sunflower oil 6.6% (0.1% in the same period of
2007) and granulated sugar 7.8% (granulated
sugar prices dropped 4.9% in the first quarter of
2007).
The world prices of vegetable fats also con-
tinued to grow. In particular , the price of sunflower
oil increased 27% on the European market in
March 2008 as compared with December 2007.
Growth in world sugar prices came to a halt
in March as the prices of raw sugar declined 0.9%
and white sugar 1.9% as compared with Febru-
ary. However , the prices of raw sugar increased
30% and white sugar 18% in January-March
2008.
The prices of meat and poultry , and also fish
and seafood registered moderate growth on the
domestic market in the first quarter of 2008. Meat
and poultry prices grew 2.6% in January-March
2008 as against 0.9% in January-March 2007
while fish and seafood prices increased 2.4%
(3.3% in the same period of 2007). In the mov-
ing 12-month period, the prices of meat and poul-
try , fish and seafood, granulated sugar and alco-
holic beverages registered the smallest growth in
March 2008 (from 8.5% to 10.1%) while the
prices of other basic food products grew in the
range of 25.2-62.2%.
World beef prices started to grow in the first
quarter of 2008, increasing 3.7% in March and
11.6% from the beginning of the year (world beef
prices declined 2.3% in March 2007 compared to
December 2006).
Vegetable and fruit prices rose 20.6% in
January-March 2008 as against 11.2% in Janu-
ary-March 2007. The increase in vegetable and
fruit prices in the first quarter of 2008 actually cor-
responded to the average growth figure for the pre-
vious seven years. Growth in vegetable and fruit
prices in January-March 2008 accounted for an
estimated 0.8 percentage points of headline infla-
tion (16.6% of overall consumer price growth). In
2008 Q1
the first quarter of 2007, growth in vegetable and
fruit prices accounted for 0.4 percentage points,
or 12.5%, of overall consumer price growth.
Growth in non-food prices accelerated to
reach 2.0% in the first quarter of 2008 (in the pre-
vious four years, growth in non-food prices did not
exceed 1.4% in January-March and equalled
1.1% in the first quarter of 2007).
The biggest growth in January-March 2008
was registered in tobacco products (3.9% as
against 2.9% in the first quarter of 2007) and
motor petrol (3.2% as against a 0.9% decrease in
the same period of 2007). The prices of building
materials, medicines, washing liquids and deter-
gents demonstrated high growth rates as they in-
creased 2.7-2.8% in the first quarter of 2008 as
compared with 1.0-2.2% in the first quarter of
2007.
Growth in non-food prices accounted for 0.7
percentage points or 14.7% of overall consumer
price growth in January-March 2008 as compared
with 0.4 percentage points or 11.6% in the first
quarter of 2007.
The prices of paid services provided to
households grew 7.5% in January-March 2008
as against 8.0% in January-March 2007 and ac-
counted for an estimated 1.9 percentage points,
or 39.0%, of overcall consumer price growth (2.0
percentage points or 58.1% of headline inflation
in the first quarter of 2007).
Housing and utility prices rose 13.5% in the
first quarter of 2008 as against 12.7% in the same
period last year . Passenger transport fees grew
8.1% in January-March 2008 as against 6.7% in
January-March 2007. Communication fees
dropped 0.2% in the first quarter of 2008 whereas
in the first quarter of 2007 they grew 10.4%.
Regulated prices of paid services grew by an esti-
mated 9.5% in the first quarter of 2008 or 1.1 per-
centage points slower than in the same period last
year.
Growth in the prices of paid services provided
to the public in January-March 2008 was 3.6 per-
centage points faster than overall growth in the
prices of goods (6.1 percentage points faster in
January-March 2007).
According to Rosstat, consumer price growth
in all federal districts in January-March 2008 was
faster than in the same period last year.
Estimates show that the difference between
various Russian regions and territories in terms of
the price of a fixed set of goods and services used
by the Federal State Statistics Service for interre-
gional comparisons of the purchasing power of the
population became less pronounced in January-
March 2008. The regional difference ratio
1 in that
period decreased to 38.6% from 43.3% in the first
quarter of 2007.
The rates of growth in non-food prices and
food prices, excluding vegetable and fruit prices,
were roughly the same in all federal districts in
January-March 2008. The rates of growth in veg-
etable and fruit prices differed considerably by re-
gion in the first quarter of 2008. In the Southern
Federal District, for instance, vegetable and fruit
prices increased 23%, whereas in the Far Eastern
Federal District they rose 10.8%.
Growth in the prices of paid services provided
to the public slowed down in January-March 2008
as compared with the same period of 2007, in all
the districts except for the Urals Federal District.
Housing prices
In January-March 2008, housing prices in-
creased 2.3% on the primary market and 6.7%
on the secondary market as compared with the
fourth quarter of the previous year 2. In January-
1 The regional difference ratio is calculated by the Bank of Russia as the difference between the price of a fixed set of goods and
services in the most expensive and the cheapest regions relative to the national value of the same set.
2 As of end of period.
72008 Q1
Inflation Dynamics
March 2007, housing prices grew 6.5% on the
primary market and 7.0% on the secondary mar-
ket.
Growth in housing prices was accompanied
by a considerable decrease in growth of housing
construction. In particular , the pace of new hous-
ing commissioning grew 51.1% in the first quar-
ter of 2007, year on year , whereas in the first quar-
ter of 2008 it slowed down to 7.8%. The steady
growth in household incomes and the develop-
ment of mortgage lending helped households fi-
nance a noticeable share of housing construction
in January-March 2008 (52.2%).
Producer prices
Industrial producer prices rose 3.0% in
January-March 2008 as against 1.7% in January-
March 2007. The acceleration of growth in pro-
ducer prices was due to their increase in manufac-
turing industries and in the production and distri-
bution of electricity , gas and water . At the same
time, producer prices in the mining sector , in par-
ticular , in the fuel and energy sector , were observed
to decline.
Producer prices in the mining sector fell 6.2%
in the first quarter of 2008 as against 2.8% in the
same period of 2007. A more considerable decline
was registered in fuel and energy producer prices,
which decreased 7.4% (3.4% in January-March
2007). The growth of prices in the mining sector ,
except the fuel and energy sector , accelerated to
7.0% in January-March 2008 as against 1.1% in
January-March 2007.
The contribution of producer prices in the
mining sector to overall producer price growth was
negative and equalled an estimated -1.7 percent-
age points in January-March 2008 (which was
tantamount to the equivalent containment of in-
dustrial producer price growth in that period). In
January-March 2007, this contribution accounted
for an estimated -0.6 percentage points.
Producer prices in the manufacturing sector
increased 4.0% in the first quarter of 2008 as
against 0.9% in the first quarter of 2007.
In the manufacturing industries whose out-
put goes directly to the consumer goods market,
price growth acceleration in January-March 2008,
as compared with the same period of 2007, was
2008 Q1
registered in the production of food, including bev-
erages, and tobacco (5.5% as against 1.7%), and
also in textile and clothing production (4.6% as
against 3.1%). Price growth slightly slowed down
in the production of leather , leather goods and
footwear in the first quarter of 2008 as compared
with the first quarter of 2007.
According to estimates, in January-March
2008, growth in producer prices in industries
whose output goes directly to the consumer goods
market accounted for 1.5 percentage points or
48.4% of growth in the prices of goods and ser-
vices included in the calculation of core inflation
(0.6 percentage points or 16.1% in the same pe-
riod of 2007).
Prices in the production, transmission and
distribution of electricity rose 18.9% in the first
quarter of 2008 as against 14.0% in the same pe-
riod of 2007.
Freight transportation charges increased
20.4% in the first three months of the year as
against 5.9% in January-March 2007. Railway
fares were up 11.5% in the period under review
(7.7% in January-March 2007).
Communication fees for corporate enti-
ties grew 10.0% in January-March 2008 as
against 4.0% in the first quarter of 2007.
Producer prices in the construction sector
rose 2.8% in the first quarter of 2008 (the same
growth was registered in the first quarter of 2007).
Agricultural producer prices increased
6.0% in January-March 2008 (3.1% in January-
March 2007) largely due to growth in producer
prices in the crop-growing sector , which rose 9.9%
(6.7% in the same period last year). The most sig-
nificant growth in the first quarter of 2008 was
registered in vegetable prices, which climbed
32.6% as against 23.6% in the first quarter of
2007.
The prices of livestock products increased
3.2% in January-March 2008 (0.8% in January-
March 2007). Cattle and poultry prices grew 1.1%
in the first quarter of 2008 whereas in the first
quarter of 2007 they dropped 0.5%.
The acceleration of growth in agricultural
producer prices had a negative effect on food price
dynamics on the consumer market.
Inflation in some countries of the
world3
Inflation in the countries that are the major
exporters of goods to Russia accelerated to 2.4%
in the first quarter of 2008 (March on December
of the previous year) from 1.1% in January-March
2007. Price growth accelerated in most of the
countries that account for a large portion of Rus-
sian imports. The biggest contribution to growth
in aggregate inflation in the countries that are the
major exporters of goods to Russia was made by
the acceleration of price growth in Ukraine (to
3 Based on data provided by the Bureau of Labor Statistics at the US Department of Labor, the Statistical Office of the European
Communities (EUROSTAT) and national statistical offices of other countries. Contribution of individual factors to US and eurozone
inflation has been evaluated by the Bank of Russia.
92008 Q1
Inflation Dynamics
9.7% from 1.3% in the first quarter of 2007). Ag-
gregate inflation was also affected by the accel-
eration of price growth in Belarus and China. As
before, growth in energy and food prices was the
factor behind the accelerated inflation in foreign
countries.
Inflationary pressure showed the signs of
weakening in the United States. Overall consumer
price growth was somewhat slower in January-
March 2008 (1.7%) than in the same period of
2007 (1.8%). The contribution of food price
growth was unchanged from the first quarter of
2007 while the contribution of core inflation to
overall consumer price growth decreased. In the
eurozone, on the contrary, inflation accelerated to
0.9% in the first quarter of 2008 (March on De-
cember of the previous year) from 0.4% in the first
quarter of 2007 due to a bigger contribution of
the changes in energy prices and, to a lesser ex-
tent, due to the contribution of core inflation.
Foreign trade
The price situation for the major Russian ex-
port commodities on world markets in January-
March 2008 was favourable. World market prices
of Russian exports
4 were on average higher than
in the same period last year , especially energy prices
that grew 57.7% while non-energy prices climbed
6.6% on average.
World oil prices were largely observed to in-
crease in the first quarter of 2008. The main rea-
sons for the rise in oil prices on the world market
were the weakening of the US dollar against other
major world currencies, strong investor demand,
growth in China’s oil imports, the tough position
taken by the OPEC member countries on the oil
production quotas, and also interrupted oil deliv-
eries as a result of terrorist attacks on oil pipelines,
interruptions in the operation of oil refineries, and
tense geopolitical and unfavourable climatic con-
ditions. World oil prices were observed to rise to
$105.6 per barrel in January-March 2008. As a
result, the price of Urals crude increased 73.7% in
the first quarter of 2008 year on year to $93.7 per
barrel, according to Bank of Russia estimates. Pe-
troleum product prices were on average 70.8%
higher than in the first quarter of 2007 while the
prices of natural gas in Europe climbed 27.7%.
World ferrous metal prices increased 27.6%
in the first quarter of 2008 as compared with the
first quarter of 2007 while the prices of iron ore
grew 66% and copper 31%. World aluminium and
nickel prices dropped 2% and 30%, respectively.
The prices of other Russian raw material exports,
except timber , were higher than in January-March
2008.
The world prices of food products and agri-
cultural raw materials continued to increase in
4 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). Data on average monthly prices of natural gas and ferrous metal price indices were provid-
ed by the World Bank, and on other goods, by the International Monetary Fund.
2008 Q1
January-March 2008 due to rapidly growing de-
mand (especially from rapidly developing Asian
nations as well as from African countries), reduc-
tion of stocks, and larger use of agricultural raw
materials for the production of bio-fuel.
The prices of Russia’s major food imports
were observed to grow on world markets in the
first quarter of 2008. The growth of world demand
for food from the consumer sector and industry ,
the increased costs of the agrarian sector , and
changes in the food structure in Asian countries
created prerequisites for price increases. The price
growth was also due to a decrease in food and
agricultural raw material stocks, unfavourable
weather conditions and dependence on the energy
market (the use of food raw materials for the pro-
duction of ethanol), and the unstable geopolitical
situation in some regions of the world.
The prices of grain, sunflower oil, butter , milk
and dairy products, vegetables and fruit grew con-
siderably in the first quarter of 2008 as compared
with the first quarter of 2007. The prices of poul-
try , beef and raw sugar also went up.
The prices of US wheat increased 110% and
Canadian wheat 170% in the first quarter of 2008
as compared with the first quarter of 2007. The
price of Thai rice grew 50%, Canadian barley 40%
and American maize 30%. The prices of sunflower
oil on the European market increased 150%, but-
ter 110% and raw sugar 9%. Meat prices were
observed to grow in the first quarter of 2008 as
beef and poultry prices rose 7% year on year. Veg-
etable and fruit, and beverage prices also registered
growth. In particular , the world prices of bananas
went up 37% and oranges 35%, while coffee
prices grew 26% and tea prices 14%. The con-
tract prices of imported milk increased 90% in
January-March 2008 as compared with January-
March 2007.
Growth in the prices of exported products
was considerably faster in January-March 2008
5 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 grains are based on data reported by the World Bank, butter, beef and poultry by the Interna-
tional Monetary Fund and sunflower oil by the All-Russia Market Research Institute’s Bulletin of Commercial Information (VNIKI).
112008 Q1
Inflation Dynamics
than growth in import prices, a process that shows
that the terms of Russia’s trade with foreign coun-
tries
6 improved as compared with January-March
2007.
Russia’s foreign trade surplus increased in the
first quarter of 2008 year on year as exports grew
faster than imports. Russia’s trade balance surplus7
increased 63.8% to $47.5 billion in the period
under review (it decreased 20.5% to $29.0 billion
in January-March 2007).
Foreign trade in some countries8
According to international trade forecasts for
2008, developed countries, which consume a large
part of raw materials, materials and industrial prod-
ucts exported by other countries, will continue to
demonstrate relatively slow growth in imports. At
the same time, a favourable price situation is pre-
dicted in 2008 as a whole for goods traded by
emerging economies, especially for the countries
exporting energy products as they can benefit
from the improved terms of trade resulting from
faster growth in export prices as compared with
import prices.
Growth in world energy prices since the
middle of 2007 was mainly responsible for the in-
crease in value of mineral fuel imports by the Eu-
ropean Union and the United States, including
imports from Russia, in January-February 2008 as
compared with the same period of 2007. The im-
ports of Russian commodities by the CIS countries
were also influenced by growth in oil and natural
gas prices.
Demand
Domestic demand
GDP expanded by an estimated 8% in the
first quarter of 2008 year on year , a slightly higher
figure than in January-March 2007. Domestic de-
mand demonstrated high growth rates. The posi-
tive influence of consumer demand on the expan-
sion of the output of goods and services was lim-
ited by competitive imports. The share of imports
in the retail trade commodity resources in January-
March 2008 expanded by a percentage point as
compared with the same period a year earlier and
stood at 47%. The share of food imports decreased
from 37% to 36.8%, while the share of non-food
imports expanded by 1.2 percentage points to
54.5%. According to estimates, the domestic de-
mand for imports grew faster than the demand for
domestic products.
The expansion of domestic demand due to
growth in revenues in various sectors of the
economy facilitated dynamic growth in the import
of investment and consumer goods. Bank of Rus-
sia estimates show that the import of investment
goods necessary for economic development grew
faster than the import of consumer goods (the lat-
ter mostly increased due to rapid growth in the
import of cars, household appliances and other
non-food products).
Imports from non-CIS states - especially from
Asia-Pacific Economic Cooperation (APEC) mem-
ber countries, and primarily from China - grew
faster than overall imports
9 in January-March
2008. Imports from EU member countries also
grew faster than overall imports. Imports from the
CIS, especially Ukraine, registered slow growth,
while imports from Uzbekistan, Turkmenistan and
Georgia decreased.
Growth in the import of goods in January-
6 The ratio between export and import price indices.
7 According to a balance of payments estimate as of April 4, 2008.
8 According to the US Department of Commerce Bureau of the Census, the Statistical Office of the European Communities (EURO-
ST AT) and the IMF (World Economic Outlook, April 2008).
9 According to data provided by the Federal Customs Service of Russia.
2008 Q1
GDP consumption (growth as % of corresponding period of previous year)*
2006 2007
Q1 Q2 Q3 Q4 Full year Q1 Q2 Q3 Q4 Full year
GDP 6.3 7.4 7.5 8.0 7.4 7.4 8.1 7.3 9.5 8.1
Final consumption 8.2 8.6 9.2 9.7 8.9 10.4 10.6 10.5 11.0 10.6
Of which:
- households 10.3 10.4 11.5 12.4 11.2 12.4 12.7 12.8 13.1 12.8
Gross capital formation 13.0 23.7 16.4 19.8 18.3 24.9 25.9 18.1 23.6 22.6
Net exports -7.1 -14.3 -21.5 -22.8 -15.6 -23.1 -29.2 -41.0 -20.4 -28.1
- exports 8.9 6.6 6.1 7.7 7.3 3.8 5.3 4.4 11.3 6.4
- imports 24.0 22.2 19.1 22.9 21.9 28.4 28.9 26.4 26.1 27.3
* Quarterly data have not been revised or matched with the full-year figures; they are to be updated in March 2008.
Source: Rosstat.
March 2008 was largely due to the expansion of
import volumes. However , growth in import vol-
umes was slower than in January-March 2007. As
a year earlier , import prices increased far less than
import volumes. The acceleration of growth in im-
port prices in the first quarter of 2008 was caused
by a considerable increase in food and agricultural
raw material prices. The rise in the prices of some
import products, particularly foodstuffs, provoked
price growth on the domestic market. Rapid
growth in the import of machinery and equipment,
especially motor cars, contributed to the significant
increase in the cost of imports.
Household spending on final consumption
increased 12.8% in 2007 as against 11.2% in
2006. Economic growth, the financial stability of
enterprises and the provision of more secure gov-
ernment social guarantees in the first quarter of
2008 led to a 13% increase in real money income.
The share of wages and salaries in household
money income expanded from 69.4% to 70.5%
in the first quarter of 2008, while the share of in-
comes from entrepreneurial activities contracted.
The structure of household income use also
changed slightly in January-March 2008: the share
of consumer spending expanded from 74.1% to
75.4%, while the share of compulsory payments
and duties decreased from 12.8% to 12.3% and
the share of organised savings dropped from 9.8%
to 8.2%. The share of foreign exchange purchase
grew by 1.7 percentage points to 6.9%. Therefore,
people preferred to spend more on consumption
than increase organised savings amid accelerating
inflation and low deposit interest rates.
Rapid increase in consumer spending stimu-
lated retail trade, which accelerated its turnover
growth to 16.7% in January-March 2008 from
14.6% in January-March 2007, while the value
of paid services provided to the public rose 6.8%
(8.7% in January-March 2007). Transport, mu-
nicipal and communications services accounted for
most of the value of paid services.
Government expenditures on final consump-
tion increased 5.0% in 2007 as against 2.5% in
2006. The increase in non-interest federal budget
expenditures relative to GDP , the uneven spend-
ing of budget funds during the year and, as a con-
sequence, the build-up of expenditures at the end
of the year stimulated inflation, especially in the
second half of 2007. At the same time, by absorb-
ing additional revenues from oil exports into its
Stabilisation Fund, the Russian Government
checked growth in consumer prices.
According to Federal Treasury data, federal
budget expenditures stood at 15.2% of GDP in
January-March 2008 (14.0% in January-March
2007). Non-interest expenditures made up
14.5% of GDP (as against 13.4% in January-
132008 Q1
Inflation Dynamics
March 2007), the highest ratio since 2000. The
increase in non-interest expenditures was mostly
due to growth in social spending. Larger expendi-
tures in the first quarter of 2008 were also attrib-
utable to measures taken by the Finance Ministry
to level out cash expenditures during the year. The
federal budget execution in terms of non-interest
expenditures was 18.0% of the level written down
in the 2008 federal budget law as amended, which
represents the highest figure for the past three
years (14.1% in the same period of 2007).
In accordance with the new principles en-
forced in 2008 to manage federal budget revenues
received from the payment of export duties and
taxes on crude oil and natural gas, oil and natural
gas revenues in the first quarter of 2008 were
channelled in full into forming the oil and natural
gas revenue fund in the federal budget. Therefore,
the Reserve Fund and the Sovereign Wealth Fund,
as compared to the mechanism of forming the
Stabilisation Fund of the Russian Federation, were
not replenished in the first quarter of 2008. At the
same time, the value of funds on the government’s
deposit accounts with the Bank of Russia grew by
988.9 billion rubles in the first quarter of 2008 (an
increase of 284.3 billion rubles or 40.3% as com-
pared with the same period of 2007), and contin-
ued to have absorbing effect on liquidity dynam-
ics.
The federal budget surplus stood at 6.8% of
GDP in January-March 2008, which represents a
decrease of 0.3 percentage points as compared
with the same period of 2007. The decline in the
federal budget surplus in 2007 and early 2008,
resulting from growth in budget expenditures, can
be viewed as an indicator of fiscal policy easing.
The expansion of domestic demand caused by this
factor can exert extra inflationary pressure in 2008.
Gross capital formation increased 22.6% in
2007 as against 18.3% in 2006. Investment ac-
tivity remained high in January-March 2008. Fixed
capital investment expanded 20.2% in the first
quarter of 2008 as against 22.8% in the first quar-
ter of 2007. The largest sums were invested in the
mining sector , transport and communications.
Investments in machinery , equipment and
transport vehicles accounted for more than a third
of total investments. About one fifth thereof was
used to acquire imported equipment. Imports of
machinery , equipment and transport vehicles in-
creased 54.9% in 2007 as against 51.3% in 2006.
Growth in engineering imports helps modernise
production and introduce technological innova-
tions and, consequently, raise labour productivity ,
control price growth in the economy, and create
conditions for sustainable economic growth.
Fixed capital investment was largely financed
(by 58.5%) by raising funds in 2007. Growth in
revenues in the economy led to the expansion of
the share of budget funds in investment financing
(from 20.2% to 21.2%). The share of bank loans
in investment financing stood at 9.4% (as against
9.5% in 2006).
According to data compiled by Rosstat in the
course of studying investment activity , the princi-
pal objective of investment in 2007 was to replace
worn-out technology , enhance the efficiency of
production and expand production capacity. The
major obstacles to growth in investment were the
shortage of own funds, big risks and high interest
rates on bank loans.
As imports grew considerably faster than
exports, net exports of goods and services de-
creased 28.1% in 2007.
As a result, high investment activity and
growth in household incomes stimulated economic
growth. At the same time, growing demand caused
production to exceed its natural (potential) level
and, consequently, contributed to the acceleration
of price growth on the consumer goods market.
Foreign demand10
According to IMF estimates, world produc-
tion growth will slow to 3.7% in 2008 from 4.9%
in 2007. GDP growth in the countries that account
for a substantial part of Russian exports slowed to
an estimated 3.6% in January-March 2008 from
5.1% in the first quarter of 2007 and is expected
to decelerate further to 3.2% in 2008 (as against
4.6% in 2007). Demand in foreign countries has
been adversely affected by the unfavourable situ-
ation on the real estate market and in the construc-
tion sector, increased credit risks and volatility on
financial markets. Expected changes in external
conditions can lead to the slowing of growth in
demand for industrial products and raw materials,
including energy and metals.
The value of Russian exports increased in
10 According to data compiled by the national statistical offices of Russia’s trading partners.
2008 Q1
January-March 2008 year on year , largely due to
growth in the value of oil, petroleum products and
natural gas exports resulting from a significant rise
in energy prices. Contract export prices grew con-
siderably faster in January-March 2008 than in the
first quarter of 2007. The exports of goods
11 in-
creased 50.7% to $108.1 billion in January-March
2008 year on year. Export volumes grew more
slowly than export prices. Exports of goods to the
EU, especially Italy and Poland, and APEC mem-
ber countries, particularly the Republic of Korea and
Japan, rose faster than overall exports of goods
in January-March 2008. Meanwhile, growth in
exports to CIS countries slowed down.
Supply
The economic situation in Russia in 2007
was characterised by the year-on-year accelera-
tion of production growth in many types of eco-
nomic activity. The manufacturing sector , trade,
education and healthcare increased their contribu-
tion to value added growth in 2007 as compared
with 2006, whereas the mining sector’s contribu-
tion decreased. This process indicates that the Rus-
sian economy has become less susceptible to the
fluctuating external economic conditions and the
role of the services sector has increased.
Output in most types of economic activity
continued to increase in the first quarter of 2008.
Output in the key types of activity increased 8.7%
in January-March 2008 (as against 8% in the first
quarter of 2007). The most rapid rates of growth
were registered in the construction sector and re-
tail trade. Retail trade turnover expanded 16.7%
in January-March 2008 as against 14.6% in Janu-
ary-March 2007, while growth in the construction
sector stood at 28.9% as against 17.2% a year
earlier . Growth in freight transport turnover accel-
erated to 4.2% from 3.2% in the same period last
year.
Industrial output expanded 6.2% in January-
March 2008 as against 7.2% in January-March
2007. The year-on-year deceleration of produc-
tion growth in January-March 2008 was largely
due to the slowing of growth in output in manu-
facturing industries (from 12.8% in the first quar-
ter of 2007 to 8.7% in the first quarter of 2008)
and also in the mining sector (from 4% to 0.7%).
The expansion of supply had a favourable
effect on price dynamics in the economy. Agricul-
tural output increased 4.5% in January-March
2008 as against 3.4% in January-March 2007.
There was a rise in the output of major livestock
products, including cattle and poultry (by 8.9%)
and milk (by 2.1%). As a result, the output of meat
and meat products increased 13.5% in January-
March 2008 year on year (of which the produc-
tion of meat and premium-quality by-products,
grew 19.7%). Growth in livestock producer prices
was moderate and stood at 3.2% in January-
March 2008. Nevertheless, this growth was faster
than in the same period last year (0.8%).
Growth in agricultural producer prices accel-
erated to 6% in the first quarter of 2008 as against
3.1% in the first quarter of 2007, with price growth
in crop production quickening to 9.9% as against
6.7%, respectively. Especially high was the increase
in potato prices (by 20%) and vegetable prices (by
32.6%).
The rate of production capacity utilisation has
increased persistently in recent years. The Centre
for Economic Studies has estimated that the rate
of production capacity utilisation in industry
stabilised at 70% in the second and third quarters
of 2007, exceeding by 2 percentage points the rate
registered in the third quarter of 2006. The high-
est capacity utilisation rate was registered at the
pulp-and-paper enterprises specialising in the
book publishing and printing business (80%) and
enterprises turning out rubber and plastic products
(79%) and other non-metal mineral products
(77%). The lowest capacity utilisation rate was
registered at enterprises producing foodstuffs
(63%) and coke and petroleum products (62%).
Estimates show that the production gap be-
tween actual and potential output was positive in
the first quarter of 2008, which is a sign of high
inflationary pressure in the economy.
Labour market
One factor of the acceleration of inflation
was growth in the number of people employed in
the economy in early 2008. In January-March
2008, the number of jobholders rose by 1.9% as
against 2.2% in the same period last year .
Labour productivity increased by an esti-
11 According to a balance of payments estimate as of April 4, 2008.
12 According to data provided by the Federal Customs Service of Russia.
152008 Q1
Inflation Dynamics
mated 5.5% in 2007 (as against 6.5% in 2006),
restraining price growth in the economy. Accord-
ing to estimates, labour productivity in the services
sector grew faster than in the production of goods
in 2007 as compared with the previous year .
Growth in the services sector considerably ex-
ceeded growth in the manufacturing sector. The
number of people employed in the services sector
increased in 2007 year on year , whereas the manu-
facturing sector registered a fall in job numbers.
Estimates show that in January-March
2008, as in the previous years, real wages grew
faster (by 14%) than labour productivity. At the
same time, the gap between growth in real wages
and growth in labour productivity narrowed as
compared with the same period last year.
The share of wages in the GDP structure by
source of income expanded from 44.1% in 2006
to 45.6% in 2007.
Wages continued to differ widely in differ-
ent types of activity in early 2008. The highest av-
erage monthly wage in January-March 2008 was
registered in the financial sector (41,481 rubles)
and fuel and energy production (34,956 rubles).
They exceeded the national average by 2.8 and 2.3
times, respectively. The lowest wages were regis-
tered in agriculture, hunting and forestry (6,503
rubles), the textile and clothing industry (7,204
rubles), and the production of leather , leather
goods and footwear (8,332 rubles). These made
up, respectively , 43.2%, 47.9% and 55.4% of the
national average monthly wage. Below-average
wages were characteristic in the types of activity
that were funded, to a large extent, from the fed-
eral budget (education, utility , social and other ser-
vices and healthcare).
The number of unemployed, calculated ac-
cording to the ILO-recommended methodology ,
continued to fall in January-March 2008 as it de-
creased by 10% (as against 8.5% in January-
March 2007). The total number of jobless stood
at 6.3% of the economically active population (as
against 7% in the first quarter of 2007).
2008 Q1
Exchange rate
Judging by the evaluation of Russia’s balance
of payments, the current account surplus
amounted to $39.0 billion in the first quarter of
2008 as against $25.0 billion in the fourth quar-
ter of 2007. The ongoing turmoil on international
financial markets provoked a net capital outflow
of $24.9 billion from the private sector of the Rus-
sian economy in January-March 2008.
The Bank of Russia remained, in this situa-
tion, the net buyer of foreign exchange, cushion-
ing fluctuations of the operational benchmark —
cost of the bi-currency basket, whose composition
remained unchanged from the fourth quarter of
2007 (0.45 euros and 0.55 US dollars). The Bank
of Russia’s operations contributed to growth in
Russia’s international reserves, which increased by
$30.6 billion in the first quarter of 2008 (by $51.0
billion in the fourth quarter of 2007) to $507.0
billion as of April 1, 2008.
The nominal ruble/dollar rate gained less
in the first quarter of 2008 than in the previous
quarter (1.6% as against 3.5%). Until mid-Feb-
ruary , the ruble/dollar rate fluctuations were
characterised by different dynamics accompanied
by technical exchange rate readjustments. Despite
the prevailing trend towards the US dollar weak-
ening attributable to the threat of a credit crisis,
the US currency was helped on many occasions by
Monetary Conditions
the publication of positive reports on the US mac-
roeconomic situation and also by statements of
some US officials. In particular , in January , the US
Treasury provided data on the growth of capital
inflow into the US economy while Ben Bernanke,
Chairman of the US Federal Reserve System, spoke
about the need to step up fiscal measures to sup-
port the economy. However , starting from mid-
February , a clearly expressed trend towards the US
dollar’s depreciation was observed amid slower
growth in the US economy. As a result, the prices
of futures contracts reflected increased probability
that the US Federal Reserve would cut its key in-
terest rate. Eventually, the value of the US currency
was adversely affected by the US Federal Reserve’s
decisions to cut the federal funds rate by a total of
1 percentage point. In March, monthly growth in
the ruble’s appreciation against the US dollar in
nominal terms accelerated to 3.3%. As a result,
the ruble rose to 23.52 against the dollar by the
end of the first quarter of 2008.
The nominal ruble/euro rate fell by 1.6%
in the first quarter of 2008 as compared with the
fourth quarter of 2007 (in 2007 Q4 it declined by
1.9%). The nominal rate of the ruble against
the bi-currency basket fell by 0.2% in the first
quarter of 2008, whereas in the fourth quarter of
2007 it gained 0.6%.
The nominal effective rate of the ruble
172008 Q1
Monetary Conditions
against foreign currencies fell by 0.8% in the first
quarter of 2008 (as against 0.6% in the fourth
quarter of 2007). The real effective rate of the
ruble gained 1.7% (as against 0.7% in the previ-
ous quarter). The faster appreciation of the real
effective rate of the ruble in January-March 2008
than that of the nominal effective rate was due to
higher inflation in Russia as compared with its lead-
ing trading partners.
The real ruble/dollar rate appreciated
5.1% in the first quarter of 2008 (as against 6.2%
in the fourth quarter of 2007). The relative contri-
bution of the nominal ruble rate and Russian infla-
tion to the strengthening of the real ruble/dollar
rate gradually became more even during 2007,
whereas in January-March 2008 it was significant
consumer price growth in the Russian economy
that proved to be a prevailing factor again.
The ruble/euro real exchange rate gained
2.1% in the first quarter of 2008 as against 0.6%
in the fourth quarter of 2007. Relatively higher
domestic inflation remained the main factor of
ruble/euro real exchange rate dynamics.
The weakening of the US dollar against the
ruble in the first quarter of 2008 contributed to the
slowing of consumer price inflation in Russia by
about 0.08 percentage points. However , its effect
was entirely offset by the strengthening of the
nominal rate of the euro against the ruble. Calcu-
lations show that a slight decrease in the nominal
rate of the ruble against the bi-currency basket in
January-March 2008 will bring about a slight up-
ward pressure on inflation during 2008 and, ac-
cording to estimates, it will not amount to more
than 0.05 percentage points.
On the international currency market, the
dollar depreciated against the currencies of most
of Russia’s trading partners in the first quarter of
2008. It lost the most against some European cur-
rencies (the Swiss frank, the Czech and Slovak
koruna and the Polish zloty) and the Japanese yen.
Compared to December 2007, in March 2008 the
dollar lost more than 6% against the euro, more
than 4% against the yuan, and about 11% against
the yen. The devaluation of the dollar against the
euro resulted from higher interest rates in the
eurozone as compared with the United States. As
China broadened the range of the yuan’s intraday
fluctuations against the US dollar from mid-2007,
the yuan strengthened more rapidly in early 2008
as compared with the first quarter of 2007. The
Ukrainian hryvnia remained unchanged against the
dollar in the first quarter of 2008. The National
Bank of Belarus formulated the task to maintain a
stable rate of the Belarusian ruble against the dol-
lar as a guideline for its exchange rate policy in
2008.
Interest rates
Money market and Bank of Russia interest
rates
As before, the objective of the US Federal
Reserve in early 2008 was to maintain stability in
the financial sector. In the first quarter of 2008, it
cut the benchmark federal funds rate from 4.25%
to 2.25% p.a. (in April, the rate was cut to 2%
2008 Q1
p.a.). The European Central Bank maintained the
refinancing rate at 4% p.a. due to increased infla-
tion risks in the eurozone. The Bank of England in
the first quarter of 2008 cut the refinancing rate
from 5.5% to 5% p.a. Sweden, Poland, Hungary
and the Czech Republic raised interest rates. LIBOR
rates fell by 1.9-2.2 percentage points on the dol-
lar-denominated deposits with terms from one
month to one year in January-March 2008 (March
on December 2007) and were largely unchanged
on the euro-denominated deposits. LIBOR rates on
the dollar-denominated deposits were lower than
LIBOR rates on the euro-denominated deposits
with the same terms.
The Bank of Russia took a decision to raise
interest rates on its operations from February 4,
2008 to curb inflation and further reduce growth
in money supply. The overnight credit rate setting
the upper limit of the Bank of Russia interest rate
band was raised from 10% to 10.25% p.a. The
interest rate on standard “tom-next” deposit op-
erations setting the lower limit of the Bank of Rus-
sia interest rate band was increased from 2.75%
to 3% p.a.
The minimum repo auction interest rates
with different terms were set as follows: overnight
at 6.25% p.a., seven days at 6.75% p.a. and 90
days at 9.75% p.a.
Interest rates on Bank of Russia standard
“spot-next” and “call” deposit operations were
raised to 3% p.a., and on standard “one-week”
and “spot-week” deposit operations to 3.5% p.a.
The interest rates on other operations of the
Bank of Russia were also changed.
The average weighted one-day repo auction
rate ranged from 6.01% to 6.60% p.a. in the first
quarter of 2008 (in the fourth quarter of 2007, it
varied between 6.03% and 6.70% p.a.).
In January-March 2008, the average
weighted interest rate at the 4-week deposit auc-
tions ranged from 4.02% to 4.29% p.a. (in the
fourth quarter of 2007, it varied between 4.01%
and 4.19%) and at the 3-month deposit auctions
from 4.65% to 4.81% p.a. (from 4.90% to 4.95%
p.a. in the fourth quarter of 2007). The average
weighted yield at the Bank of Russia bond (OBR)
1 Source: Reuters.
192008 Q1
Monetary Conditions
auctions ranged from 4.73% to 5.45% p.a. (in the
fourth quarter of 2007, it varied between 5.06%
and 5.30% p.a.).
Folded cumulative frequency distribution
curves were used to analyse the deviations of
money market short-term interest rates (MIACR
rates
2) from interest rates on the largest Bank of
Russia operations (deposit and repo rates 3). The
distribution curves drawn for the first quarter of
2008 were compared with the ones drawn for the
period from August 16 to December 29, 2007.
The dynamics of MIACR deviation from in-
terest rates on the Bank of Russia operations testi-
fied to the fact that the MIACR rate was consider-
ably closer to the Bank of Russia deposit interest
rate in the first quarter of 2008 than in the second
half of 2007. In particular , the MIACR median de-
viation from the Bank of Russia deposit rate de-
creased considerably in the first quarter of 2008
and stood at 0.9 percentage points (as against 2.9
percentage points in August-December 2007).
At the same time, the MIACR deviation from
2 Average weighted interest rate on overnight interbank ruble-denominated loans on the Moscow market (extended mostly with-
out security).
3 Interest rate on “tom-next,” “spot-next” and “call” deposits, which sets the lower limit of the Bank of Russia interest rate band, has
been used as the deposit rate. The minimum overnight repo auction interest rate was assumed as the repo rate (6% until February
4, 2008 and 6.25% p.a. after February 4, 2008).
2008 Q1
the Bank of Russia repo rate increased consider-
ably in the first quarter of 2008 and stood at -2.4
percentage points as against -0.4 percentage
points in August-December 2007. This change
shows that banks have become more active in us-
ing liquidity absorption operations as compared
with the previous period.
Therefore, the dynamics of MIACR deviation
from the Bank of Russia rates suggests that liquid-
ity on the money market contributed to the fact
that MIACR was on average lower in the first quar-
ter of 2008 as compared to the fourth quarter of
2007. The average daily value of the Bank of Rus-
sia debt on instruments used to absorb credit in-
stitutions’ temporarily surplus funds increased to
333.9 billion rubles in the first quarter of 2008 as
against 223.4 billion rubles in the fourth quarter
of 2007. At the same time, credit institutions’ debt
to the Bank of Russia on liquidity instruments
dropped on average in January-March 2008 to
65.9 billion rubles as against 100.7 billion rubles
in the fourth quarter of 2007.
The interest rate on overnight ruble loans
on the interbank market remained within the Bank
of Russia interest rate band during most of the first
quarter of 2008. On some days in the first half of
the quarter, the interbank rate dropped below the
Bank of Russia rate on ruble-denominated “tom-
next” deposits. The overnight ruble-denominated
MIACR range of fluctuations narrowed slightly to
1.47-6.71% p.a. in 2008 Q1 from 2.63-8.32%
in 2007 Q4. The average MIACR on overnight
ruble-denominated loans stood at 3.79% p.a. in
2008 Q1 as against 5.43% p.a. in 2007 Q4. De-
cline in the level of the overnight interbank ruble
loan rate as compared with the previous quarter,
which continued to fluctuate within a wide range,
was attributable to the absence of any noticeable
ruble liquidity deficit and the relatively high cost of
external funding for credit institutions observed
from the second half of 2007.
The fact that credit institutions did not ex-
perience any significant shortage of liquid ruble
resources also affected longer-term interbank loan
rates. The average interest rate on interbank ruble
loans with terms from one to three months fell
from 7.9% p.a. in the fourth quarter of 2007 to
212008 Q1
Monetary Conditions
7.0% p.a. in the first quarter of 2008, with terms
from three to six months it dropped from 8.7%
p.a. to 7.8% p.a. and with terms from six to twelve
months it climbed from 9.4% p.a. to 9.5% p.a.,
respectively. The average spread between interest
rates on interbank ruble loans with terms of three
to six months and overnight loans stood at 3.9
percentage points in January-March 2008 (as
against 3.3 percentage points in the fourth quar-
ter of 2007).
The cost of bank credit to non-financial
enterprises was affected by the high cost of ex-
ternal funding, growing demand for credit re-
sources and the Bank of Russia’s decision to raise
the refinancing rate since February 4. The average
interest rate on short-term loans to non-financial
enterprises increased by 13 basis points in the first
quarter of 2008 as compared with the fourth quar-
ter of 2007 and reached 10.9% p.a., and the long-
term credit rate increased by 93 basis points to
12.3% p.a. Compared to the previous quarter, the
first quarter of 2008 saw the yield curve for loans
to non-financial enterprises move up in the over-
1-month segment, and it moved down in the
shorter-term segment. As a result, the gradient of
the yield curve for loans to non-financial enter-
prises increased, suggesting that the persistent
medium-term inflationary expectations of credit
market participants remained unchanged.
The average interest rate on loans to house-
holds with terms of up to one year rose by 127
basis points in the first quarter of 2008 as com-
pared with the fourth quarter of 2007 and stood
at 20.9% p.a., and the rate on loans with terms
longer than one year increased by 33 basis points
to 15.1% p.a. Compared to the fourth quarter of
2007, in January-March 2008 the average inter-
est rate on household deposits with terms of up
to one year decreased by 26 basis points and stood
at 7.0% p.a. whereas the rate on deposits with
terms of one to three years rose by 66 basis points
to 8.4% p.a.
Asset prices
In the first quarter of 2008, yields on the
federal loan bond (OFZ) market demonstrated
an upward dynamics. By the end of the first quar-
ter , the OFZ market portfolio effective indicator had
2008 Q1
increased by 31 basis points as compared with the
end of the previous quarter and stood at 6.84%
p.a. The average quarterly market portfolio effec-
tive indicator rose by 13 basis points and stood at
6.71% p.a.
The OFZ yield curve retained its rising direc-
tion in the first quarter of 2008. In mid-February ,
it moved up relative to the beginning of January ,
reflecting OFZ yield growth after the Bank of
Russia’s decision to raise the refinancing rate. By
the end of March, the OFZ yield curve had become
steeper due to the fall in yields on short-term gov-
ernment bonds and the growth of yields on longer-
term instruments. This change reflects some
growth in risk premiums on OFZ bond operations
amid investors’ persistent future inflationary expec-
tations.
In the first quarter of 2008, the Russian
stock market demonstrated a considerable price
downturn attributable to capital outflow from the
domestic stock market influenced by negative de-
velopments on international financial markets. The
average quarterly levels of Russia’s major stock in-
dices RTS and MICEX declined by 7.4% and 9.5%,
respectively , in 2008 Q1 as compared with 2007
Q4.
Against the decline of Russia’s major stock
indices in the first quarter of 2008, the stock price
dynamics varied considerably by the sectors of the
economy. In the period under review, a downturn
in stock prices was registered in telecommunica-
tions, consumer goods and retail trade, financial,
energy , and oil and gas sectors, the downward
trend being most pronounced – judging by aver-
age quarterly indicators – in the financial sector .
That was mainly due to the global decline in the
banking sector stock prices caused by the contin-
ued crisis on the world financial market. At the
same time, there was an increase in the stock prices
of major Russian companies in industrial sector and
metallurgy largely attributable to their lesser sen-
sitivity to global price fluctuations, as compared
with the highly liquid stocks in other sectors of the
economy.
Judging by the good fundamentals of the
Russian economy , the stock prices of Russian com-
232008 Q1
Monetary Conditions
ruble-denominated deposits during most of 2007.
Growth in foreign currency savings (both in cash
and non-cash forms) also exerted downward pres-
sure on the dynamics of savings denominated in
the domestic currency.
Faster growth in the demand for money than
economic growth (and, consequently , the increase
in the monetisation of the economy) in the previ-
ous years was due to the asset price dynamics. In
the past few years, asset prices were observed to
grow considerably more rapidly than consumer
prices prompting the economy’s extra transac-
tional need for money and decelerating the veloc-
ity of money. However , a slowdown in the growth
of asset prices (and, along with it, a less intensive
fall in the velocity of money) that began in 2007
and, according to estimates, continued into the first
quarter of 2008, restrained the increase in the de-
mand for money.
Therefore, given that this situation persists,
growth in the demand for the domestic currency is
likely to slow down this year as compared with the
previous year .
The annual rate of growth in money supply
slowed down in the first quarter of 2008 amid a
considerable fall in the volume of Bank of Russia
currency interventions as compared with the first
quarter of 2007. A significant net outflow of capi-
tal from the private sector in the first quarter of
2008 cut considerably the inflow of foreign cur-
rency channelled through the capital account. The
value of funds on the government’s deposit ac-
panies that demonstrated a downtrend in January-
March have a potential for growth in the second
quarter of 2008.
Monetary aggregates
The slowdown in the annual growth in
money supply, which began in the second half of
2007, continued in the first quarter of 2008, af-
fected by both the dynamics of money demand
and the conditions of money supply.
Despite a persistently rapid economic
growth, the demand for money may increase
slower in 2008 as compared to the previous year
due to some factors restraining its growth.
The slowdown in consumer price growth in
the previous years contributed to the accumula-
tion of financial assets by households. However ,
the price growth that accelerated in the second half
of 2007 and continued into the first quarter of
2008 adversely affected the public propensity for
organised savings.
The process of the economy’s de-
dollarisation has been a major factor of the in-
creased demand for the domestic currency in the
past few years. However , in 2007 and the first
quarter of 2008 growth in foreign currency-de-
nominated deposits accelerated considerably, and
net sales of foreign cash (largely euros) to house-
holds through banks increased significantly at the
end of 2007 and in the first months of 2008 –
partly due to a considerable appreciation, in nomi-
nal terms, of the euro against the ruble, as well as
cuts in interest rates on the largest household
2008 Q1
counts with the Bank of Russia grew faster in the
first quarter of 2008 as compared with the same
period last year . That is why, despite the year-on-
year acceleration of growth in the value of the credit
institutions’ claims on non-financial enterprises
and households in the first quarter of 2008, a con-
siderable decrease in the Bank of Russia currency
interventions amid the continued accumulation of
funds on the government’s deposit accounts with
the Bank of Russia slowed down growth in money
supply. As a result, the annual rate of growth in
monetary aggregate M2 declined in the first
quarter of 2008 (except January) to 42.2% as of
April 1, 2008 from 47.5% as of January 1, 2008
and 52.6% as of April 1, 2007.
The rate of growth in the supply of money
remains high despite a slowdown observed in the
second half of 2007 and in the first quarter of
2008. Monetary gaps remained on positive ground
as of the beginning of 2008, after a continued in-
crease during the past eighteen months. Accord-
ing to preliminary estimates, the monetary gaps
did not narrow in the first quarter of 2008 and
therefore, the risk of growth in the money supply
persisted and this may affect price stability in the
medium and long term.
As in the previous year , the biggest contri-
bution to the annualised M2 growth in the first
quarter of 2008 was made by monetary aggre-
gate M1 (cash in circulation and demand depos-
its). At the same time, the annualised rate of
growth in M1, which largely reflects the transac-
tional needs in the economy , fell in the first quarter
of the year from 42.5% as of January 1, 2008 to
35.2% as of April 1, 2008 and was considerably
slower than in the same period a year earlier
(49,8%). The trend of a significant slowdown in
cash growth observed in 2007 — amid rapid
growth, year-on-year , in the value of individuals’
payment for goods and services with bank cards
— continued into the first quarter of 2008. Apart
from that, the increased value of foreign cash pur-
chase by households at the end of 2007 and at
the beginning of 2008 may have also contributed
to a certain extent to slower growth in cash sup-
ply. As a result, the annualised M0 growth slowed
down to 26.8% as of April 1, 2008 from 42.1% a
year earlier .
The dynamics of funds on demand deposits
largely reflected the flow of funds on the accounts
of non-financial enterprises as the demand depos-
its are mostly created from non-financial enterprise
funds. In the absence of clearly expressed trends,
the annual rates of growth in demand deposits fell
in the first quarter from 52% as of January 1, 2008
to 42.8% as of April 1, 2008 (as compared with
57.5% as of April 1, 2007) due to their significant
decrease in the last month of the quarter . The slow-
down in the annual rates of growth was attribut-
able to a certain extent to rapid growth in the value
of demand deposits in the same period of the pre-
vious year.
The annual rates of growth in the total value
of ruble-denominated time deposits stood at
252008 Q1
Monetary Conditions
53.3% as of April 1, 2008 and were higher than
the growth rates of other monetary aggregates due
to the continued significant increase in the value
of non-financial enterprises’ time deposits, which
grew more than 150% as compared with the same
date a year earlier . Despite such a significant in-
crease in the value of funds on non-financial en-
terprise time deposits, annualised growth in the
total value of time deposits (including household
deposits) was slower in the first quarter of 2008
than in the first quarter of 2007.
Growth in the value of time deposits decel-
erated due to a considerable slowdown of growth
in the value of household time deposits, which
started in 2007 and continued into the first quar-
ter of 2008. In particular , the annualised growth
in the value of household time deposits slowed
down to 33.9% as of April 1, 2008 from 39.9%
as of January 1, 2008 and 50.2% as of April 1,
2007.
The trend of growth in the value of foreign
currency deposits, observed in the second half
of 2007, continued in January-February 2008. The
annual rate of growth in the total value of foreign
currency deposits fell sharply in March 2008
largely due to a significant slowdown of growth in
foreign currency deposits of non-financial enter-
prises — possibly resulting from corporate foreign
debt payments, which were mostly made in March
2008. From the second quarter of 2007, house-
hold foreign currency deposits demonstrated —
amid an accelerated nominal appreciation of the
euro against the ruble — a steady trend towards
growth which continued in January-March 2008.
The dynamics of the nominal euro/dollar
and euro/ruble rates also contributed to the in-
crease in household demand for cash euros. As a
result, the net sales of foreign currency cash, es-
pecially euros, to households grew considerably at
the end of 2007 and during the first months of
2008.
Credit aggregates
The dynamics of credit aggregates4 did not
show any sustainable trend in the first quarter of
2008 and, therefore, no conclusion can be made
4 Credit aggregates in rubles and foreign currency are considered here and below.
2008 Q1
at the moment about the impact of the increased
costs of domestic and foreign borrowings on the
credit activity of economic agents.
The annual rates of growth in loans to non-
financial enterprises and individuals in January-
March 2008 were on the whole the same as at the
beginning of the year (54.5% as of April 1, 2008).
The structure of loans also remained stable.
The borrowing conditions on the domestic
and foreign markets did not improve in the first
quarter of 2008. Higher risk premiums resulting
from continued world market instability became
one of the reasons for the increase in the cost of
loans for Russian borrowers on global markets. In
particular , risk premiums for unsecured loans on
the European money market fluctuated within a
wide range from August 2007 and increased in
January-March 2008. The spread between inter-
est rates on short- and long-term loans also in-
creased after its fall in early 2008.
Deteriorated borrowing conditions had a
considerably weaker impact on the foreign borrow-
ings of Russian non-financial enterprises than on
Russian bank borrowings (growth in foreign liabili-
ties of credit institutions slowed down consider-
ably in the first quarter of 2008).
The increased cost of borrowings on the do-
mestic market, which manifested itself in the
growth of interest rates on loans, had on the whole
no marked effect on the dynamics of loans ex-
272008 Q1
Monetary Conditions
tended to non-financial enterprises in the first
quarter of 2008. Amid the persistently rapid
growth in investment activity , the annual growth
in credit to non-financial enterprises remained high
and stood at 53.9% as of April 1, 2008.
Although the annual growth in housing
loans extended to households decreased amid
slower growth in prices on the primary housing
market, the loans extended to individuals remain
the most rapidly growing component in total lend-
ing to the economy. After their significant fall in
2007, the annual rates of growth in housing loans
to individuals stabilised in the first quarter of 2008
and stood at 56.5% as of April 1, 2008 (as against
76.2% a year earlier). The volume of housing loans
continues to grow more rapidly as compared with
other loans to households. The share of housing
loans in total household loans exceeded 25% as
of January 1, 2008.
2008 Q1
Statistical Addendum
Table 1
Consumer prices by group of goods and services (month on month, %)
Monthly
inflation Core inflation Food price growth Food price
growth*
Vegetable and
fruit price growth
Non-food price
growth
Growth in
non-food prices,
excluding petrol
prices**
Service price
growth
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
October 0.3 0.5 0.0 0.4 -4.1 0.6 0.7 0.4
November 0.6 0.6 0.8 0.6 2.7 0.6 0.6 0.5
December 0.8 0.7 1.1 0.8 3.6 0.5 0.5 0.7
Full year (December on
December)
9.0 7.8 8.7 8.5 10.3 6.0 5.7 13.9
January 1.7 0.6 0.9 0.6 4.1 0.4 0.4 4.7
February 1.1 0.5 0.8 0.5 3.6 0.3 0.4 2.6
March 0.6 0.5 0.8 0.5 3.2 0.4 0.4 0.6
April 0.6 0.5 0.8 0.5 3.1 0.4 0.4 0.5
May 0.6 0.3 1.0 0.1 7.8 0.4 0.3 0.5
June 1.0 0.4 1.7 0.4 12.2 0.3 0.3 0.6
July 0.9 0.9 1.4 1.4 1.9 0.4 0.4 0.6
August 0.1 1.1 -0.6 1.6 -16.1 0.6 0.5 0.5
September 0.8 1.6 1.0 2.2 -8.8 0.8 0.8 0.4
October 1.6 2.1 3.3 3.5 0.9 0.9 0.9 0.1
November 1.2 1.1 1.9 1.5 6.2 0.9 0.8 0.6
December 1.1 0.9 1.6 1.2 5.6 0.7 0.5 0.9
Full year (December on
December) 11.9 11.0 15.6 14.9 22.2 6.5 6.4 13.3
January 2.3 1.1 1.9 1.2 8.3 0.6 0.6 5.4
February 1.2 1.0 1.7 1.3 5.1 0.6 0.6 1.4
March 1.2 1.1 2.0 1.5 5.9 0.7 0.7 0.6
* Excluding vegetable and fruit prices.
** Since March 2005 - Bank of Russia estimate.
Note: Tables 1 to 7 are based on Rosstat data and Bank of Russia calculations.
292008 Q1
Statistical Addendum
Table 2
Consumer prices by group of goods and services (since start of year on accrual basis, %)
Monthly
inflation Core inflation Food price growth Food price
growth*
Vegetable and
fruit price growth
Non-food price
growth
Growth in
non-food prices,
excluding petrol
prices**
Service price
growth
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
October 7.5 6.5 6.7 7.0 3.7 5.0 4.5 12.5
November 8.2 7.1 7.5 7.6 6.5 5.5 5.2 13.0
December 9.0 7.8 8.7 8.5 10.3 6.0 5.7 13.9
January 1.7 0.6 0.9 0.6 4.1 0.4 0.4 4.7
February 2.8 1.1 1.8 1.1 7.8 0.7 0.8 7.4
March 3.4 1.7 2.6 1.7 11.2 1.1 1.2 8.0
April 4.0 2.2 3.3 2.1 14.7 1.5 1.7 8.6
May 4.7 2.5 4.3 2.3 23.6 1.9 2.0 9.1
June 5.7 3.0 6.1 2.7 38.6 2.2 2.3 9.8
July 6.6 3.9 7.6 4.1 41.2 2.6 2.8 10.5
August 6.7 5.0 7.0 5.8 18.5 3.2 3.3 11.1
September 7.5 6.7 8.1 8.1 8.1 4.0 4.2 11.6
October 9.3 8.9 11.6 11.9 9.0 4.9 5.1 11.7
November 10.6 10.1 13.7 13.5 15.7 5.8 5.9 12.4
December 11.9 11.0 15.6 14.9 22.2 6.5 6.4 13.3
January 2.3 1.1 1.9 1.2 8.3 0.6 0.6 5.4
February 3.5 2.1 3.6 2.5 13.9 1.2 1.2 6.8
March 4.8 3.2 5.7 4.0 20.6 2.0 1.9 7.5
* Excluding vegetable and fruit prices.
** Since March 2005 - Bank of Russia estimate.
2008 Q1
Table 3
Consumer prices by group of goods and services (month on corresponding month of previous year, %)
Monthly
inflation Core inflation Food price growth Food price
growth*
Vegetable and
fruit price growth
Non-food price
growth
Growth in
non-food prices,
excluding petrol
prices**
Service price
growth
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
October 9.2 7.8 8.8 8.3 14.4 6.1 5.7 14.1
November 9.0 7.8 8.7 8.3 12.4 6.0 5.7 13.9
December 9.0 7.8 8.7 8.5 10.3 6.0 5.7 13.9
January 8.2 7.7 7.6 8.0 3.1 6.0 5.7 12.3
February 7.6 6.9 5.3 6.6 -5.1 5.8 5.6 14.2
March 7.4 6.7 4.9 6.2 -5.2 5.8 5.6 14.0
April 7.6 6.8 5.4 6.3 -1.9 5.9 5.8 13.9
May 7.8 6.7 5.9 6.3 3.0 5.9 5.7 13.8
June 8.5 6.9 7.7 6.6 16.2 5.9 5.7 13.7
July 8.7 7.3 8.3 7.4 15.3 5.9 5.8 13.7
August 8.6 7.8 8.3 8.3 7.5 5.7 5.8 13.4
September 9.4 8.7 10.0 10.0 10.2 5.8 6.1 13.4
October 10.8 10.3 13.6 13.4 15.9 6.0 6.3 13.1
November 11.5 10.9 14.9 14.4 19.8 6.3 6.4 13.2
December 11.9 11.0 15.6 14.9 22.2 6.5 6.4 13.3
January 12.6 11.5 16.7 15.6 27.1 6.8 6.6 14.1
February 12.7 12.1 17.6 16.4 29.1 7.0 6.8 12.7
March 13.3 12.7 19.1 17.5 32.5 7.4 7.1 12.7
* Excluding vegetable and fruit prices.
** Since March 2005 - Bank of Russia estimate.
312008 Q1
Statistical Addendum
Table 4
Inflation growth over period since start of year due to price changes by group of goods and services (percentage points)
Foodstuffs* Non-food
products Paid services Vegetables and
fruit
Inflation over
period, % Core inflation Non-core
inflation**
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
October 2.7 1.7 3.0 0.1 7.5 5.0 2.5
November 3.0 1.9 3.1 0.3 8.2 5.5 2.7
December 3.3 2.0 3.3 0.4 9.0 6.1 3.0
January 0.2 0.1 1.2 0.2 1.7 0.5 1.2
February 0.4 0.3 1.8 0.3 2.8 0.9 1.9
March 0.6 0.4 2.0 0.4 3.4 1.3 2.1
April 0.8 0.5 2.1 0.6 4.0 1.7 2.3
May 0.8 0.7 2.3 0.9 4.7 1.9 2.7
June 1.0 0.8 2.4 1.5 5.7 2.3 3.4
July 1.5 0.9 2.6 1.6 6.6 3.0 3.6
August 2.1 1.1 2.7 0.7 6.7 3.9 2.8
September 3.0 1.4 2.9 0.3 7.5 5.3 2.3
October 4.3 1.7 2.9 0.3 9.3 7.0 2.3
November 4.9 2.0 3.1 0.6 10.6 7.9 2.7
December 5.4 2.3 3.3 0.9 11.9 8.7 3.2
January 0.4 0.2 1.3 0.3 2.3 0.8 1.5
February 0.9 0.4 1.7 0.5 3.5 1.6 1.9
March 1.4 0.7 1.9 0.8 4.8 2.5 2.3
* Excluding vegetables and fruit.
** Growth in prices of goods and paid services not included in calculation of core consumer price index.
2008 Q1
Table 5
Monthly inflation growth due to price changes by group of goods and services (percentage points)
Foodstuffs* Non-food
products Paid services Vegetables and
fruit
Inflation over
period, % Core inflation Non-core
inflation**
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
October 0.1 0.2 0.1 -0.2 0.3 0.4 -0.1
November 0.2 0.2 0.1 0.1 0.6 0.5 0.2
December 0.3 0.1 0.2 0.1 0.8 0.5 0.3
January 0.2 0.1 1.2 0.2 1.7 0.5 1.2
February 0.2 0.1 0.7 0.1 1.1 0.4 0.7
March 0.2 0.1 0.1 0.1 0.6 0.4 0.2
April 0.2 0.1 0.1 0.1 0.6 0.4 0.2
May 0.1 0.1 0.1 0.3 0.6 0.2 0.4
June 0.2 0.1 0.2 0.6 1.0 0.3 0.6
July 0.5 0.1 0.2 0.1 0.9 0.7 0.2
August 0.6 0.2 0.1 -0.8 0.1 0.8 -0.7
September 0.8 0.3 0.1 -0.4 0.8 1.3 -0.5
October 1.3 0.3 0.0 0.0 1.6 1.6 0.0
November 0.5 0.3 0.2 0.2 1.2 0.8 0.4
December 0.5 0.2 0.2 0.2 1.1 0.7 0.5
January 0.4 0.2 1.3 0.3 2.3 0.8 1.5
February 0.4 0.2 0.3 0.2 1.2 0.8 0.4
March 0.5 0.3 0.2 0.3 1.2 0.8 0.3
* Excluding vegetables and fruit.
** Growth in prices of goods and paid services not included in calculation of core consumer price index.
332008 Q1
Statistical Addendum
Table 6
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 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
October 36.3 22.4 39.4 2.0 66.7 33.3
November 36.2 22.9 37.8 3.2 67.3 32.7
December 36.5 22.5 36.4 4.5 67.1 32.9
January 13.4 8.3 69.0 9.3 29.5 70.5
February 14.9 9.2 65.3 10.6 31.3 68.7
March 17.8 11.6 58.1 12.5 38.3 61.7
April 19.6 13.5 52.9 14.1 42.8 57.2
May 18.0 14.3 48.3 19.4 41.6 58.4
June 17.6 13.7 42.7 26.0 40.4 59.6
July 22.9 13.9 39.2 23.9 45.8 54.2
August 31.7 16.9 40.8 10.6 58.5 41.5
September 39.3 18.7 37.9 4.1 69.9 30.1
October 46.6 18.6 31.1 3.7 75.4 24.6
November 46.3 19.2 28.8 5.7 74.5 25.5
December 45.7 19.4 27.8 7.2 72.8 27.2
January 18.9 9.3 58.1 13.7 36.2 63.8
February 25.1 12.1 47.9 14.9 46.1 53.9
March 29.7 14.7 39.0 16.6 52.7 47.3
* Excluding vegetables and fruit.
** Growth in prices of goods and paid services not included in calculation of core consumer price index.
2008 Q1
Table 7
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 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
October 51.0 73.9 34.6 -59.5 145.8 -45.8
November 34.7 29.1 19.3 16.9 74.1 25.9
December 39.6 19.0 23.2 18.2 64.4 35.6
January 13.4 8.3 69.0 9.3 29.5 70.5
February 17.1 10.6 59.7 12.6 34.2 65.8
March 31.4 22.7 24.5 21.4 70.7 29.3
April 30.0 24.6 22.3 23.1 69.6 30.4
May 8.4 19.5 20.6 51.6 34.4 65.6
June 15.8 10.7 17.0 56.5 35.1 64.9
July 55.9 15.7 17.4 10.9 79.2 20.8
August 724.2 250.9 165.2 -1,040.4 1,016.5 -916.5
September 99.9 33.4 14.7 -48.0 160.7 -60.7
October 78.5 18.2 1.2 2.1 99.3 0.7
November 43.6 23.6 13.3 19.5 67.8 32.2
December 39.2 21.6 19.2 20.0 56.7 43.3
January 18.9 9.3 58.1 13.7 36.2 63.8
February 36.8 17.4 28.5 17.3 64.8 35.2
March 43.2 22.6 12.8 21.4 72.2 27.8
* Excluding vegetables and fruit.
** Growth in prices of goods and paid services not included in calculation of core consumer price index.
352008 Q1
Statistical Addendum
Table 8
Russia's key macroeconomic and financial indicators
Year Q1 Q2 Q3 Q4
Macroeconomic indicators
GDP
over period since start of year, billion rubles
2005 4,460 9,540 15,413 21,625
2006 5,845 12,206 19,487 26,880
2007 6,748 14,497 23,324 32,987
over period since start of year, as % of corresponding period of
previous year
2005 105.5 105.9** 106.0** 106.4
2006 106.3 106.9** 107.1** 107.4
2007 107.4 107.7** 107.6** 108.1
as % of corresponding quarter of previous year
2005 105.5 106.2 106.1 107.5
2006 106.3 107.4 107.5 108.0
2007 107.4 108.1 107.3 109.5
Industrial output indices
as % of corresponding quarter of previous year
2006 104.1 106.6 106.9 107.5
2007 107.2 107.1 105.5 105.7
2008 106.2
over period since start of year, as % of corresponding period
of previous year
2006 104.1 105.3 105.9 106.3
2007 107.2 107.1 106.6 106.3
2008 106.2
Agricultural output
as % of corresponding quarter of previous year
2006 102.1 101.8 101.4 110.4
2007 103.4 104.3 103.0 103.1
2008 104.5
over period since start of year, as % of corresponding period
of previous year
2006 102.1 101.9 101.6 103.6
2007 103.4 104.0 103.4 103.3
2008 104.5
Fixed capital investment
over period since start of year, billion rubles
2006 658.4 1,676.0 2,963.3 4,730.0
2007 916.6 2,365.7 4,129.3 6,626.8
2008 1,295.9
as % of corresponding quarter of previous year
2006 108.8 117.7 116.1 120.3
2007 122.8 124.2 118.2 120.6
2008 120.2
Retail trade turnover
over period since start of year, billion rubles
2006 1,857.2 3,925.3 6,162.6 8,711.9
2007 2,254.7 4,793.3 7,588.4 10,853.0
2008 2,936.0
as % of corresponding quarter of previous year
2006 111.4 113.6 115.3 115.3
2007 114.6 115.6 116.6 116.6
2008 116.7
Federal budget on accrual
basis, as of end of period
revenue
billion rubles
2006 1,399.1 2,938.1 4,561.0 6,278.9
2007 1,421.9 3,245.7 5,087.6 7,781.1
2008 1,932.7
as % of GDP
2006 24.0 24.1 23.4 23.4
2007 21.1 22.4 21.8 23.6
2008 22.0*
expenditure
billion rubles
2006 823.2 1,854.7 2,866.5 4,284.8
2007 945.6 2,169.7 3,464.3 5,986.6
2008 1,332.7
as % of GDP
2006 14.1 15.2 14.7 16.0
2007 14.0 15.0 14.8 18.2
2008 15.2*
Federal budget surplus on accrual basis, as of end of period
billion rubles
2006 575.9 1,083.4 1,694.6 1,994.1
2007 476.3 1,076.1 1,623.2 1,794.5
2008 600.0
as % of GDP
2006 9.9 8.9 8.7 7.4
2007 7.1 7.4 7.0 5.4
2008 6.8*
Note. T able 8 is based on data compiled by the Bank of Russia, Federal State Statistics Service and on Federal T reasury reported data.
From April 2006, pursuant to Bank of Russia Ordinance No. 1660-U, dated February 17, 2006, the calculation of interest rates on
bank lending and deposit operations includes data reported by bank branches.
2008 Q1
Table 8 (continued)
Year Q1 Q2 Q3 Q4
Socio-economic indicators
Nominal imputed average
monthly per employee wage
rubles
2006 9,397 10,401 10,949 12,203
2007 11,876 12,993 13,494 15,742
2008 15,508
as % of corresponding quarter of previous year
2006 122.3 125.1 125.1 125.2
2007 127.3 125.9 124.0 129.3
2008 128.7
over period since start of year , as % of corresponding period
of previous year
2006 122.3 123.7 124.1 124.3
2007 127.3 126.6 125.7 126.7
2008 128.7
Real imputed average monthly
per employee wage
as % of corresponding quarter of previous year
2006 110.3 114.3 114.3 114.8
2007 118.2 116.6 113.9 116.1
2008 114.0
Household money income per capita monthly average, rubles
2006 8,200.0 9,933.9 10,253.3 12,316.8
2007 9,901.4 11,953.8 12,700.8 15,604.6
2008 12,484.9
Household real disposable
money income
as % of corresponding quarter of previous year
2006 109.9 115.5 114.5 113.7
2007 110.0 109.1 111.8 111.0
2008 110.0
over period since start of year, as % of corresponding period
of previous year
2006 109.9 … … 113.5
2007 110.0 109.5 110.4 110.7
2008 110.0
Household spending,
as % of income
purchase of goods and payment of services
2006 73.1 67.7 71.0 65.6
2007 74.1 69.4 71.3 65.8
2008 75.4
compulsory payments and contributions
2006 10.8 10.3 10.4 10.5
2007 12.8 12.4 12.0 13.0
2008 12.3
growth in savings
2006 11.1 10.7 8.3 11.3
2007 9.8 8.5 6.8 10.6
2008 8.2
foreign exchange purchase
2006 7.4 7.0 7.2 6.0
2007 5.2 5.3 5.2 5.2
2008 6.9
cash on hand
2006 -2.5 4.3 3.2 6.7
2007 -1.9 4.4 4.7 5.4
2008 -2.8
Average imputed pension total, rubles
2006 2,539 2,727 2,800 2,839
2007 2,846 3,091 3,108 3,299
2008 3,823
Real imputed pension
as % of corresponding quarter
of previous year
2006 107.8 107.2 103.7 102.5
2007 104.1 104.9 102.0 104.3
2008 119.0
over period since start of year,
as % of corresponding period
of previous year
2006 107.8 107.5 106.1 105.1
2007 104.1 104.5 103.6 103.8
2008 119.0
Total number of unemployed (calculated by ILO methodology)
million
2006 5.7 5.5 5.0 5.0
2007 5.2 4.5 4.3 4.3
2008 4.7
as % of economically active
population
2006 7.8 7.4 6.7 6.8
2007 7.0 6.0 5.7 5.6
2008 6.3
372008 Q1
Statistical Addendum
Table 8 (continued)
Year Q1 Q2 Q3 Q4
Foreign economic activities
Price of Urals crude
over period since start of year, $/barrel
2006 57.7 61.1 62.5 60.9
2007 54.0 59.7 64.0 69.5
2008 93.7
as % of corresponding period of previous year
2006 134.0 134.7 126.7 120.9
2007 93.5 97.7 102.4 114.1
2008 173.7
Exports of goods
over period since start of year, $ billion
2006 67.3 143.9 223.7 303.6
2007 71.8 155.6 245.3 355.5
2008 108.1**
as % of corresponding period of previous year
2006 134.1 131.1 128.1 124.5
2007 106.5 108.1 109.6 117.1
2008 150.7
Imports of goods
over period since start of year, $ billion
2006 30.9 69.7 112.3 164.3
2007 42.8 95.5 153.9 223.4
2008 60.7**
as % of corresponding period of previous year
2006 120.1 126.4 128.2 131.0
2007 138.6 137.1 137.0 136.0
2008 141.8
Current account (over period since start of year), $ billion
2006 30.4 54.7 78.6 94.4
2007 22.9 37.8 53.3 78.3
2008 37.0**
Net capital outflow (inflow) by private sector (over period since start of year), $ billion
2006 -5.6 15.0 27.4 41.9
2007 13.5 67.4 60.4 81.2
2008 -22.8**
Foreign investment in Russia's non-financial
sector (Rosstat data)
over period since start of year, $ billion
2005 6.0 16.5 26.8 53.6
2006 8.8 23.4 35.3 55.1
2007 24.6 60.3 87.9 120.9
as % of corresponding period of previous year
2005 97.6 86.9 92.1 132.4
2006 146.0 141.9 131.7 102.7
2007 2.8 times 2.6 times 2.5 times 2.2 times
of which
direct
over period since start of year, $ billion
2005 1.9 4.5 6.6 13.1
2006 3.8 6.4 10.3 13.7
2007 9.8 15.8 19.6 27.8
as % of corresponding period of previous year
2005 130.0 131.0 118.1 138.8
2006 2.0 times 143.6 155.5 104.6
2007 2.5 times 2.5 times 191.3 2.0 times
portfolio
over period since start of year $ billion
2005 0.1 0.2 0.4 0.5
2006 0.2 0.5 0.7 3.2
2007 0.2 1.1 1.5 4.2
as % of corresponding period of previous year
2005 89.9 135.2 160.5 136.3
2006 2.9 times 2.9 times 182.3 7.0 times
2007 85.8 ? 2.2?. ? 2.3?. 131.8
other
over period since start of year, $ billion
2005 4.0 11.8 19.9 40.1
2006 4.7 16.5 24.4 38.2
2007 14.7 43.4 66.7 89.0
as % of corresponding period of previous year
2005 87.3 76.7 85.2 130.5
2006 117.2 139.1 122.8 95.3
2007 3.1 times 2.6 times 2.7 times 2.3 times
Russia's international reserves (as of end of period), $ billion
2006 205.9 250.6 266.2 303.7
2007 338.8 405.8 425.4 476.4
2008 507.0
Real ruble exchange rate indices,
last month of quarter (as % of December
of previous year)***
ruble vs. US dollar
2006 6.9 10.0 12.1 16.7
2007 2.3 3.8 8.1 15.0
2008 6.5
ruble vs. euro
2006 6.5 4.9 6.0 5.6
2007 3.1 4.1 4.5 5.8
2008 0.6
effective rate
2006 6.2 7.0 7.9 7.4
2007 2.7 3.3 3.8 5.1
2008 1.5
2008 Q1
Table 8 (continued)
Year Q1 Q2 Q3 Q4
Financial market indicators (including Sberbank rates)
Average for period
Overnight interbank credit rate, % p.a.
in rubles
2006 3.2 2.8 2.6 5.1
2007 3.9 3.4 4.9 5.4
2008 3.9
in US dollars
2006 4.4 4.8 5.2 5.2
2007 5.2 5.2 5.1 4.5
2008 3.2
OFZ yields****, % p.a.
2006 6.8 6.9 6.8 6.7
2007 6.6 6.6 6.6 6.6
2008 6.7
Interest rate on household time deposits,
% p.a.
up to 1 year in rubles
2006 8.3 7.9 7.6 7.7
2007 7.4 7.3 7.0 7.2
2008 7.0
over 1 year in rubles
2006 7.6 5.2 5.2 5.4
2007 7.9 7.5 7.1 6.8
2008 7.4
up to 1 year in US dollars
2006 5.6 5.7 5.7 5.9
2007 5.4 5.3 5.2 5.2
2008 5.1
over 1 year in US dollars
2006 6.2 4.6 5.0 5.5
2007 6.8 6.6 6.4 7.0
2008 6.9
Interest rate on credit to non-financial
institutions, % p.a.
up to 1 year in rubles
2006 10.4 10.6 10.3 10.4
2007 9.9 9.6 9.8 10.7
2008 10.9
over 1 year in rubles
2006 12.7 12.7 12.5 12.1
2007 12.1 11.5 11.0 11.4
2008 12.3
up to 1 year in US dollars
2006 8.6 8.4 8.6 8.5
2007 8.7 8.8 8.4 9.1
2008 8.1
over 1 year in US dollars
2006 10.5 10.2 10.4 10.0
2007 10.3 10.1 9.3 9.8
2008 9.3
Interest rate on ruble promissory notes discounted by banks, % p.a.
2006 12.9 8.7 9.2 9.7
2007 9.5 8.9 10.8 10.8
2008 10.7
MICEX rate in 'tomorrow' trades, rubles/$
2006 28.0733 27.1897 26.8053 26.591
2007 26.3056 25.8599 25.5043 24.6525
2008 24.2286
As of end of quarter
RTS index, points
2006 1,434.99 1,494.63 1,549.99 1,921.92
2007 1,935.72 1,897.70 2,071.80 2,290.51
2008 2,053.93
Refinance rate, % p.a.
2006 12 11.5 11.5 11
2007 10.5 10 10 10
2008 10.25
392008 Q1
Statistical Addendum
Table 8 (end)
Year 1.01 1.04 1.07 1.10
Monetary indicators
M0, billion rubles
2006 2,009.2 1,928.8 2,233.4 2,400.8
2007 2,785.2 2,741.2 3,027.5 3,220.9
2008 3,702.2 3,475.5
M2, billion rubles
2006 6,044.7 6,169.4 7,090.8 7,750.7
2007 8,995.8 9,412.6 10,857.7 11,494.0
2008 13,272.1 13,382.9
Net foreign assets of monetary authorities and credit institutions, billion rubles
2006 4,867.9 5,433.6 6,221.1 6,281.9
2007 6,905.3 7,957.8 8,746.3 9,084.6
2008 9,912.0 10,462.5
Domestic claims, billion rubles
2006 4,460.8 4,129.4 4,256.2 4,944.1
2007 5,727.7 5,696.9 6,241.6 6,670.5
2008 8,224.3 8,319.6
Money (monetary survey definition), billion rubles
2006 3,858.5 3,855.9 4,479.3 4,856.1
2007 5,598.4 5,774.3 6,676.5 7,088.4
2008 7,974.3 7,801.0
Quasi-money (monetary survey definition), billion rubles
2006 3,362.6 3,537.0 3,825.5 4,041.1
2007 4,548.3 5,120.2 5,352.7 5,605.4
2008 6,653.8 7,106.2
Foreign currency deposits, billion rubles
2006 1,178.2 1,225.9 1,221.0 1,153.2
2007 1,155.4 1,490.6 1,183.7 1,212.4
2008 1,366.1 1,547.0
Broad monetary base, billion rubles
2006 2,914.2 2,721.4 3,287.0 3,486.0
2007 4,122.4 4,210.2 5,139.1 4,587.2
2008 5,513.3 4,871.4
Balances in correspondent accounts, billion rubles
2006 508.6 320.0 430.9 443.7
2007 638.1 518.1 528.7 576.3
2008 802.2 596.3
M2 velocity
annual average
2006 4.4 4.3 4.2 4.0
2007 3.8 3.6 3.4 3.2
2008 3.1 3.0*
change since start of year, %
2006 -6.5 -1.4 -4.8 -8.3
2007 -13.2 -6.1 -12.2 -16.3
2008 -18.8 -4.0*
Monetisation of the economy (by M2 aggregate), %
2006 22.7 23.0 23.8 24.7
2007 26.1 27.8 29.8 31.2
2008 32.2 33.5*
Money multiplier
by broad monetary base
2006 2.1 2.3 2.2 2.2
2007 2.2 2.2 2.1 2.5
2008 2.4 2.8
change since start of year, %
2006 13.2 9.3 4.0 7.3
2007 5.2 2.5 -3.2 14.8
2008 10.3 14.1
Foreign exchange rates
rubles per UD dollar
2006 28.78 27.70 26.94 26.78
2007 26.33 26.01 25.82 24.95
2008 24.55 23.52
rubles per euro
2006 34.19 33.63 34.24 33.98
2007 34.70 34.69 34.72 35.35
2008 35.93 37.07
* Preliminary data.
** Estimate.
*** Appreciation of the ruble (+), depreciation of the ruble (-).
**** Effective indicator of the OFZ market
portfolio.
© The Central Bank of the Russian Federation, 2008
Research and Information Department