CBR Quarterly Inflation Review - Q3 2005
Central bank: cbr | Type: quarterly_review | Date: 2005-09-30

THE CENTRAL BANK
OF THE RUSSIAN FEDERATION
(BANK OF RUSSIA)
Quarterly
Inflation
Review
2005 Q3
Research and Information Department
Introduction........................................................... 1
Major Inflation Indicators .......................................... 3
Quantitative and Qualitative Monetary Indicators .......... 17
Statistical Addendum ............................................. 25
1 2005 Q3
Major Inflation Indicators
In recent years, global factors have started
to play a more significant role in inflation in some
countries. Price dynamics in each country increas-
ingly reflect the aggregate world balance of de-
mand and supply. Prices grow in most countries
but increasing globalization intensifies interna-
tional competition and this factor restricts infla-
tion. At the same time, inflation can intensify dur-
ing some periods under the impact of objective
factors that affect pricing in particular countries.
These factors include, in particular, the growth of
world oil prices observed in the past few years.
A higher-than-expected price growth was
registered in many countries in 2005. For example,
the US consumer price growth reached its highest
level in January-September 2005 since 1990. In the
USA, Great Britain and eurozone countries, the
growth of inflation accelerated in January-Sep-
tember 2005 due to the rise in energy prices.
Russia also registered higher-than expected
consumer price inflation in the first nine months
of 2005. It was attributable to factors typical of
other countries (first of all, the growth of energy
prices) and specific short-term factors unrelated
to general world trends or monetary policy. A con-
siderable increase in the prices of paid services,
including federally and regionally administered
prices, pertains first of all to these factors.
Core inflation in Russia declined at a lower-
than-expected rate to conform to the 2005 infla-
tion target. Unlike other countries, foodstuffs pre-
vail in the core inflation structure (and also in the
consumer price index as a whole) in Russia. There-
fore, the basic consumer price index in Russia is
more volatile and is affected by non-fundamen-
tal factors. Core inflation failed to decrease more
considerably in 2005 due to the fast growth of
some food prices, especially meat and fish prices.
The 2005 inflation growth in many countries was
not attributable to the accelerated rise in food
prices. In Russia, however, the accelerated growth
of meat and poultry prices, registered last year,
continued to persist in 2005, despite a slower in-
crease in food prices as a whole. Since 2004, Rus-
sia has introduced quotas on meat imports to
stimulate the development of domestic produc-
tion and protect it from the competition of im-
ported goods. The continued fast growth in meat
and poultry prices indicates the persisting imbal-
ances of demand and supply. However, this pro-
cess is objective because the domestic market is
still underdeveloped.
The trend of the past few years towards the
slower growth in non-food prices continued in
2005 and it corresponded to the general inflation
fall.
Therefore, the factors that restrained the
slowing of core inflation were largely linked with
the situation on some local commodity markets.
This sphere mainly depends on the efficiency of
foreign trade regulation measures, steps to de-
velop and protect the domestic market and struc-
tural changes and is less dependent on the Bank
of Russia’s monetary policy. Nevertheless, mon-
etary conditions largely shape inflationary back-
ground.
The inflow of foreign currency into the do-
mestic market within the framework of the Bank
of Russia’s managed floating exchange rate re-
gime generates a large-scale increase in money
supply, which contributes to inflation in general,
especially affecting the core inflation.
The slowing of annualised M2 growth ob-
served in 2004 continued to persist in early 2005.
Despite the seasonal short-term acceleration in
money supply growth in late 2004, the monetary
sphere did not exert any additional pressure on
inflationary processes at the start of 2005. Core
inflation in the first half of 2005, taking into ac-
count the existing lags for money supply growth,
was determined by the monetary conditions of the
previous months rather than by the current con-
ditions of that period.
The accelerated annualised money supply
growth in 2005 Q2 and Q3 complicates the efforts
to achieve the 2005 adjusted inflation target and
may affect inflationary processes in the first half
of 2006. Therefore, the resumption of slower
growth in the annual rates of ruble supply is im-
portant to achieve the desired level of core infla-
tion next year.
Introduction
2005 Q3
The monetary accommodation measures
along with the stronger role of the Stabilisation
Fund of the Russian Federation (hereinafter re-
ferred to as the Stabilisation Fund) sterilise a con-
siderable part of free liquidity. In addition, low-
liquid ruble components (time deposits) prevail in
the ruble supply increase, which is important from
the viewpoint of weakening the inflationary con-
sequences of monetary growth. At the same time,
the declining share of cash in the M2 monetary
aggregate, which persisted for most of the report-
ing period, has a positive effect on inflation dy-
namics and the velocity of money.
The Bank of Russia conducted operations
with its own bonds (OBR bonds) and daily fixed
rate deposit operations on standard terms, and
also held deposit auctions as major sterilisation
instruments. At the same time, in 2005 Q3 (espe-
cially in July and August), credit institutions
showed relatively strong demand for Bank of
Russia’s instruments relating to the provision li-
quidity (mainly repo operations, and also intraday
and overnight credits).
In 2005 Q4, core inflation will be affected
(other conditions being unchanged) by the money
supply growth that accelerated in 2005 Q2, for-
eign exchange rate dynamics, and also by the sea-
sonal increase in non-interest budget expenditures
(even despite the budget’s continued sterilising
function).
3 2005 Q3
Major Inflation Indicators
According to the Federal Statistics Service,
consumer prices rose 8.6% in January-September
2005 as against 8.0% in January-September 2004.
Inflation equalled 0.6% in 2005 Q3 (5.3%
in 2005 Q1 and 2.6% in 2005 Q2). Consumer prices
rose 0.5% in July month on month and 0.3% in
September, while they dropped 0.1% in August.
Consumer price inflation in the moving 12-month
period equalled 12.3% in September 2005 as
against 13.7% in June 2005.
Core inflation stood at 6.3% in September
2005 as compared with December of the previ-
ous year (it was 6.8% in January-September
2004). The prices of goods and services included
in the core inflation calculation grew 1.8% in 2005
Q3 (2.4% in 2005 Q1 and 1.9% in 2005 Q2). The
prices of this group of goods and services rose
0.5% in July and August month on month and
0.8% in September. Core inflation in the moving
12-month period stood at an estimated 10.0% in
September 2005 as against 10.6% in June 2005.
Estimates show that growth in the prices of
goods and services included in the core inflation
calculation in January-September 2005 accounted
for 5.0 percentage points, or 58.3% of overall
consumer price growth as against 5.5 percentage
points, or 68.4%, in January-September 2004.
The relatively high level of core inflation reg-
istered in the past two years is due to volatile, lo-
cal and short-term rather than long-term factors.
Food prices, excluding vegetable and
fruit prices , grew 7.2% in January-September
2005 as against 8.0% in the same period last year.
They rose 3.1% in 2005 Q1, 2.4% in 2005 Q2 and
1.6% in 2005 Q3. In January-September 2005,
growth in food prices, excluding vegetable and
fruit prices, accounted for an estimated 3.0 per-
centage points, or 35.1%, of overall consumer
price growth as against 3.8 percentage points, or
47.0%, in the same period of 2004.
The most significant growth in January-Sep-
tember 2005 was registered in the prices of meat
and poultry, which increased 17.6% as compared
with 11.7% in the same period last year. This year,
the growth of poultry prices accelerated consid-
erably compared with the same period of 2004
(they rose 21.9% in the first nine months of 2005
as compared with 0.5% in January-September
2004). In January-September 2005, poultry prices
grew faster than beef and pork prices apparently
due to stronger consumer demand for cheaper
poultry. Meat and poultry prices grew amid the
expansion of meat imports (beef, pork and poul-
try). The domestic beef and pork output declined
Major Inflation Indicators
2005 Q3
Food price inflation rates (%)
Growth (September 2005
on December 2004)
Growth (September 2004
on December 2003) Outcome
Bread and bakery products 2.2 14.8 Retardation by 6.7 times
Cereals and legumes 0.4 10.5 Retardation by 26.3 times
Pasta 1.9 12.8 Retardation by 6.7 times
Meat and poultry 17.6 11.7 Acceleration by 1.5 times
Fish and seafood 11.5 5.3 Acceleration by 2.2 times
Milk and dairy products 4.7 3.6 Acceleration by 1.3 times
Butter 3.8 1.0 Acceleration by 3.8 times
Sunflower oil 2.6 -0.4
Granulated sugar 2.2 13.0 Retardation by 5.9 times
Alcoholic beverages 6.0 6.8 Retardation by 1.1 times
Inflation rates on the consumer goods market as a whole (%)
Growth (September 2005
on December 2004)
Growth (September 2004
on December 2003) Outcome
Prices of goods and services included in core inflation calculation 6.3 6.8 Retardation by 1.1 times
Including:
- Food prices, excluding vegetable and fruit prices 7.2 8.0 Retardation by 1.1 times
- Non-food prices 4.5 5.5 Retardation by 1.2 times
Prices of paid services provided to households 18.5 14.3 Acceleration by 1.3 times
Including:
- Prices of goods and services administered at federal or regional levels 21.7 16.1 Acceleration by 1.3 times
Vegetable and fruit prices 6.2 -1.4
5 2005 Q3
Major Inflation Indicators
Major meat and poultry market indicators (% growth)
Meat and poultry Beef Pork Poultry
2005 2004 2005 2004 2005 2004 2005 2004
Meet production (January-September as % of January-September of previous year) 1.4*** 2.3*** -20.8 -13.7 -12.8 -8.2 17.3 18.4
Livestock* and poultry production (January-September as % of January-September of previous year)
- by farms of all categories -1.2 1.0
- by agricultural enterprises 1.4 2.1 -12.1 -7.7 -3.6 -4.5 17.5 18.8
Imports** (January-September as % of January-September of previous year)
- volume 25.9 -9.8 32.2 4.4 19.8 -21.7 25.0 -10.9
- value 31.9 0.8 33.4 22.3 28.6 -10.2 32.5 -9.0
Prices (September as % of December of previous year)
- producer prices 12.4 13.7 17.5 27.2 0.9 20.9 20.7 -1.1
- livestock and poultry selling prices 16.7 15.2
- consumer prices 17.6 11.7 20.0**** 16.0**** 15.4**** 19.2**** 21.9 0.5
- import prices** 13.1 5.3 6.6 10.1 10.5 9.6 10.8 -1.6
Livestock population* as of the end of month (September as % of September of previous year) -6.9 -6.4 -7.1 -12.5
* Cattle and swine.
** The estimate is based on Rosstat's figures.
*** Including 1st category subproducts.
**** Exce
pt boneless meat.
in January-September 2005 year on year while the
domestic poultry production expanded. The accel-
erated growth of meat and poultry prices affected
the dynamics of fish and seafood prices. In the
first nine months of the year, fish and seafood
prices rose 11.5% (5.3% in the same period of
2004).
Year on year, the most significant slowdown
in January-September 2005 was registered in the
prices of bread and bakery products (by 6.7 times)
and pasta (by 6.7 times) due to the results of grain
harvesting in 2005 and the lower prices of agri-
cultural producers. As of the beginning of Octo-
ber 2005, farms of all categories thrashed 78.9
million tonnes of grain, an increase of 3.4% on
the same period last year. Agricultural producer
prices for cereals fell 10.4% in January-Septem-
ber 2005 (they rose 16.5% in January-September
2004).
In January-September 2005, as last year,
food prices, excluding vegetable and fruit prices,
grew faster than non-food prices.
Non-food prices rose 4.5% in September
2005 on December 2004 (5.5% in the same pe-
riod of 2004), the slowest growth in the prices of
this group of products for January-September in
the past ten years. Non-food prices increased 1.1%
in 2005 Q1, 1.3% in 2005 Q2 and 2.1% in 2005 Q3.
In addition to petrol, the most significant growth
in non-food prices in the first nine months of 2005
was registered in the prices of building materials
(by 7.5%) and knitwear (by 5.4%).
Petrol price dynamics were unstable in the
first half of 2005: petrol prices were observed to
go up and down during this period. In 2005 Q3,
the growth of petrol prices accelerated. The prices
of petrol rose 7.9% in September 2005 month on
month. Petrol prices grew 15.1% in January-Sep-
tember 2005 (27.3% in the same period of 2004).
The growth of petrol prices slowed down sharply
in the last ten days of September. On September
19, 2005, major oil companies introduced a mora-
torium on price growth, and after that petrol prices
rose 1.6% (6.2% in the first 19 days of Septem-
ber).
The prices of fabrics, knitwear, footwear,
clothes and underwear grew slower than in Janu-
ary-September 2004. Television and radio prices
were observed to decline by 1.3%.
Estimates show that non-food price growth
accounted for 1.5 percentage points, or 17.1%, of
overall consumer price growth in January-Septem-
ber 2005 as against 1.7 percentage points, or
21.1%, in January-September 2004.
Vegetable and fruit prices rose 6.2% in
January-September 2005 (they fell 1.4% in the
same period last year). At the same time, the in-
crease in vegetable and fruit prices in January-Sep-
tember 2005 was below the average growth fig-
ure in January-September 2001-2003 (9.1%). Ac-
cording to estimates, as a result of growth in veg-
etable and fruit prices in January-September 2005
headline inflation accelerated by 0.3 percentage
points, or 3.0%. In January-September 2004, the
2005 Q3
contribution of vegetable and fruit prices to over-
all consumer price growth was negative due to
their decline over that period and stood at -0.1
percentage points, or -0.8%.
Food prices as a whole grew 7.1% in Sep-
tember 2005 on December 2004 (they increased
7.2% in January-September 2004). Food prices
rose 4.9% in 2005 Q1 and 3.5% in 2005 Q2 and
fell 1.4% in 2005 Q3.
The prices of paid services provided to
households were up 18.5% in January-Septem-
ber 2005 as against 14.3% in January-September
2004. The prices of paid services grew 12.6% in
2005 Q1, 2.6% in 2005 Q2 and 2.6% in 2005 Q3.
The most significant increase over that period was
registered in rent and amenities prices (by 31.2%
as against 21.8% a year ago) and pre-school tu-
ition fees (by 27.0% as against 19.7% in the same
period last year).
Growth in paid service prices in January-Sep-
tember 2005 was over three times faster than
overall growth in the prices of goods, which stood
at 6.0% (2.2 times faster in January-September
2004). Estimates indicate that growth in paid ser-
vice prices in January-September 2005 accounted
for 3.9 percentage points, or 44.9%, of overall
consumer price growth as against 2.6 percentage
points, or 32.7%, in January-September 2004. The
prices of services administered at regional and mu-
nicipal levels rose by an estimated 21.4% in Janu-
ary-September 2005 as against 16.1% in the same
period of 2004.
The analysis of the distribution of in-
creases in the prices of goods and services in
2002-2005 (September on December of previous
year) was based on a selection of more than 400
consumer goods and services and made without
taking account of their weight coefficients in con-
sumer expenses.
In the past four years, the prices of more
than a half of consumer goods and services in-
cluded in the selection grew within the range of
2-10% in January-September. In 2004-2005, price
growth distribution was observed to slightly shift
towards smaller values. In 2005, as in the previ-
7 2005 Q3
Major Inflation Indicators
2004 as the price dynamics of some components
in this product group evened out.
A statistical analysis of food price increases
indicated a rise in the distribution average and the
distribution median in January-September 2005
year on year. In January-September 2005, the
prices of two thirds of all food products grew
within the range of 2-10%.
The distribution of non-food price increases
was characterised by a pronounced maximum and
small dispersion reflecting the extent of growth
deviation from the average. Therefore, the in-
creases in the prices of most goods in this group
remained within a narrow range. Thus, in Janu-
ous year, major growth (38%) in the prices of
goods and services was within the range of 2-6%
or 1.5 and 1.6 times more than in 2002 and 2003
respectively. Nevertheless, the share of quickly
appreciating goods and services was more con-
siderable than in the previous two years.
The distribution median characterising the
range of growth in the prices of the bulk of goods
and services was unchanged in January-Septem-
ber 2005 (5.7%) as compared with the same pe-
riod last year. The distribution average increased
by 0.4 percentage points year on year and stood
at 7.3% (8.8% in the same period last year). The
standard deviation, which characterises the extent
of price growth difference from the average, rose
to 8.3% from 6.7% a year ago and was larger than
in 2003. This situation was attributable to a con-
siderable increase in the share of goods and ser-
vices with a high rate of price growth. It was typi-
cal for the past two years that some goods and
services registered deflation.
In the first nine months of 2005, services
registered the largest and non-food products the
smallest price growth in the sample average. The
median values reflecting increases in the prices of
the bulk of food and non-food products did not
differ significantly compared to average values.
In January-September 2005, the standard devia-
tion for foodstuffs was actually unchanged and
increased by 1.6 times for services year on year.
The standard deviation for non-food products
decreased compared to the first nine months of
2005 Q3
ary-September 2005, goods in the 2-6% price
growth range accounted for 55.3% of all non-
food products. In the same period of 2004, this
price growth range accounted for 50.9% of
goods. The standard deviation decreased by 1 per-
centage point to 4.4%.
The distribution of service price increases in
January-September 2005 was characterised by a
peak corresponding to the 10-14% growth range.
The range of increases in the prices of the bulk of
paid services shifted towards higher price growth
as compared with last year. In 2005, there was a
relatively large share of services with the price
growth of over 30% (6.5% in 2005 as compared
with 1.8% in 2004). In the past two years, there
was a considerable share of services (12%) with
actually unchanged prices in January-September.
The share of services, which registered a fall in
prices, decreased in January-September 2005 year
on year.
According to Rosstat’s data, in the first nine
months of 2005, consumer prices in all federal
districts of Russia grew faster than last year.
Consumer prices in the North-Western, Southern,
Urals and Far Eastern Federal Districts grew faster
than in Russia as a whole by 0.4 percentage points,
0.9 points, 0.5 points and 1.7 points respectively.
According to estimates, differences be-
tween the constituent members of the Russian
Federation with respect to the cost of a fixed set
of goods and services used by the Federal Statis-
tics Service for interregional comparisons of
household purchasing power narrowed in 2004.
In 2005, this tendency changed. The regional dif-
ference ratio
1 increased in the first nine months
of 2005 to 45.2% from 41.5% in December 2004.
These dynamics are largely attributable to the fact
that the Far Eastern Federal District having the
most expensive consumer basket registered its
largest growth.
In January-September 2005, vegetable and
fruit prices demonstrated the largest differences
in growth rates by region. Thus, vegetable and
fruit prices grew 15.3% in the Far Eastern Federal
District and 1.1% in the Volga Federal District.
Growth in the prices of non-food products and
foodstuffs, excluding vegetables and fruit, was,
on the contrary, roughly the same in all federal
districts.
In the first nine months of 2005, growth in
the prices of paid services provided to households
accelerated considerably in all federal districts as
compared with the same period last year. The larg-
est increase was registered in the Southern and
the Far Eastern Federal Districts where the prices
of paid services grew by 10.0 and 9.6 percentage
points respectively (in Russia as a whole, service
prices rose by 4.2 percentage points).
External Conditions
World Economy and International Financial
Markets
The world economy continued to grow in
January-September 2005 but this growth was
slower as compared with the first nine months of
2004. Rising oil prices, relatively low US dollar rate
and higher US interest rates were the factors that
restricted world economic growth in the first nine
months of 2005. According to preliminary data,
US real GDP grew 3.6% in January-September
2005 year on year as against 4.4% in January-Sep-
tember 2004. Real GDP rose by an estimated 1.3%
in the eurozone countries in the first nine months
of 2005 as against 1.9% in the same period last
year, by 2.2% in Japan (3.4%) and by 9.4% in
China (9.5%).
The US trade deficit widened by almost
$88 billion in January-September 2005 year on
1 The regional difference ratio is calculated as the difference between the cost of a fixed set of goods and services in the mos t
expensive and the cheapest regions relative to the national value of the same set.
9 2005 Q3
Major Inflation Indicators
2 Core inflation in the USA is understood as growth in the prices of goods and services included in the consumer goods basket,
excluding foodstuffs and energy products.
3 Heating oil, boiler fuel, coal, town gas and electricity.
4 Core inflation in the eurozone countries is understood as growth in the prices of goods and services included in the consumer
goods basket, excluding foodstuffs, alcoholic beverages, tobacco and energy products.
year as imports grew faster than exports. In par-
ticular, the US deficit in trade with China increased
by almost 1.3 times to 25% of the US total trade
deficit. The growing imbalance in the US-Chinese
trade adversely affected the trade balances and
economies of the US other leading partners, in-
cluding the eurozone countries and Japan. Their
currencies (unlike the yuan) appreciated consid-
erably in nominal terms against the US dollar in
2002-2004 and made their goods less competi-
tive. The slower growth of imports into China in-
dicates that the expansion of domestic demand
in China has started to play a less significant role
in world economic growth.
US inflation equalled 4.5% in September
2005 on December 2004 (3% in September
2004). The growth of energy prices was a deci-
sive factor contributing to the US general con-
sumer price growth during that period. Its contri-
bution exceeded by two times the contribution of
core inflation
2. The contribution of food price in-
creases to consumer price growth was insignifi-
cant. Food prices rose 1.5% as against 1.7% in Sep-
tember 2004. The slower growth was largely due
to a fall in vegetable and fruit prices (by 4%). The
prices of animal products, excluding milk and dairy
products, rose 1.1% (1.3% in September 2004).
Higher motor fuel prices, which accelerated
sharply (from 26.1% in September 2004 on De-
cember 2003 to 54.8% in September 2005 on
December 2004) was the most serious inflation-
ary factor. The prices of energy products used in
the housing and communal service sector
3 in-
creased 16.3% in September 2005 on December
2004 (9.4% in September 2004).
US core inflation measured 1.8% in Sep-
tember 2005 on December 2004 (2% in Septem-
ber 2004). The higher housing charges, which
grew 2.1% (2.8% in September 2004), were a sig-
nificant factor contributing to the general increase
in consumer prices. Medical service charges and
the prices of medicine-related goods rose 3.1%
(3.4% in September 2004). Lower core inflation
suggests that the fundamental economic factors
linked with stronger consumer demand for goods
and services had a less significant effect on the
price growth rates in the USA from December
2004 to September 2005 than in the same period
last year. The US Federal Reserve’s tight monetary
policy (from June 2004 to September 2005, US
short-term interest rates were raised by 2.75 per-
centage points) helped the monetary authorities
to curb inflation. The accelerated general con-
sumer price growth amid lower core inflation in
the USA was caused by a sharp increase in energy
prices in 2005 Q3, especially in September (after
the hurricanes hit the US South-Eastern coast).
Inflation in the eurozone countries
equalled 1.9% in September 2005 on December
2004 as against 1.7% in September 2004. The
growth of energy prices, which rose 15.4% (7.2%
in September 2004), was the principal inflation-
ary factor in the eurozone economies. This factor
accounted for about two thirds of the general
consumer price growth. In particular, the prices of
fuels and lubricants for transport vehicles were up
22.9% (12.7% in September 2004); the prices of
energy products used in the housing and commu-
nal service sector grew 6.2% (1% in September
2004). The growth of food prices equalled 0.1%
in September 2005 on December 2004 (food
prices were unchanged in September 2004 on
December 2003). Vegetable and fruit prices
dropped 1.8% (4.4% in September 2004) while
meat and meat product prices rose 0.7% (0.1% in
September 2004).
Core inflation in the eurozone countries
equalled 0.6% in September 2005 on December
2004 (1.2% in September 2004). Therefore, fun-
damental economic factors had a less significant
effect on the general consumer price growth in
December 2004-September 2005 than in Decem-
ber 2003-September 2004. The exchange rate
dynamics in the first nine months of 2005 did not
restrict eurozone inflation (the euro depreciated
against the dollar in September 2005 on Decem-
ber 2004).
As for emerging market economies ac-
counting for a considerable share of Russia’s trade
turnover, inflation was observed to fall consid-
2005 Q3
erably in September 2005 as compared with De-
cember 2004 in Belarus (4.6% as against 9% in
September 2004), in Slovakia (2.4% as against
6.2%), in Poland (0.6% as against 3.3%), in Hun-
gary (3.3% as against 5%), in Brazil (4% as
against 5.5%) and in China (1.1% as against
2.6%). Inflation in China decreased as the growth
of food prices slowed down considerably. Infla-
tion accelerated to 7.1% from 5.6% in September
2004 in Ukraine and to 5% from 3.8% in
Kazakhstan.
In January-September 2005, the US Federal
Reserve raised its target for the overnight in-
terbank loan rate (federal funds rate) six times:
from 2.25% to 2.5% in February, to 2.75% in
March, to 3% in May, to 3.25% in June, to 3.5%
in August and to 3.75% in September. In 2004,
this target was raised by 1.25 percentage points.
Since December 2004, it has exceeded the Euro-
pean Central Bank’s refinance rate, which has not
changed since June 2003.
LIBOR rates on US dollar-denominated
deposits with maturities from one month to one
year rose by 1.2-1.4 percentage points in Septem-
ber 2005 on December 2004. The yields on US
treasuries rose by 0.7-0.9 percentage points for
papers with maturities from two to three years,
by 0.4 percentage points for papers with five-year
maturity and were unchanged for papers with ten-
year maturity. LIBOR rates on US dollar-denomi-
nated deposits with all terms and the yields on US
Federal Treasury bonds with all maturities were
higher in September 2005 than LIBOR rates on
euro-denominated deposits and the yields on
eurozone securities.
In the first nine months of 2005, the dollar
appreciated against the major international re-
serve currencies on foreign financial markets due
to US economic growth, higher yields of dollar-
denominated financial assets and the negative
results of the EU Constitution referendums in
France and the Netherlands. The dollar gained
8.1% against the euro, 6.3% against the Japanese
yen and 5.9% against the British pound in Sep-
tember 2005 on December 2004. The dollar also
appreciated against some other currencies signifi-
cant for the Russian economy (the Swiss franc,
Polish zloty, Kazakh tenge, Swedish krona, Hun-
garian forint, Czech koruna, Slovak koruna,
Lithuanian litas, Latvian lat, Estonian kroon and
Israeli shekel). The dollar depreciated against the
Belarussian ruble, Chinese yuan, Ukrainian
hryvnia, Turkish lira, South Korean won, Indian
rupee, Brazilian real and Romanian leu). On July 21,
2005, the People’s Bank of China revalued the
national currency by 2.1% to 8.11 yuans per dollar.
Foreign Trade
In January-September 2005, the terms of
Russia’s trade with foreign countries were consid-
erably better than in the same period of 2004 as
export prices grew faster than import prices.
In January-September 2005, the growth in
the world prices of Russia’s major export com-
11 2005 Q3
Major Inflation Indicators
modities5 accelerated. According to Bank of Rus-
sia estimates, the world price composite index
adjusted for the structure of Russian exports of
commodities that account for over 70% of their
value equalled 1.36 in January-September 2005
year on year as against 1.21 in January-September
2004. The price index was 1.39 in September 2005
on December 2004 (1.26 in September 2004).
The growth of energy prices accelerated in
the first nine months of 2005. The price of Urals
crude rose 48.2% in January-September 2005 year
on year to $49.3 per barrel (23.1% in January-Sep-
tember 2004). In August 2005, oil prices reached
their record high for the entire history of obser-
vations. The record level was reached on August 12,
when the price of Urals crude equalled $62.8 per
barrel
6. The price of Urals crude stood at $57.8 per
barrel on average in September 2005 or 61.1%
higher than in December of the previous year
(34.0% higher in September 2004).
The prices of natural gas and petroleum
products on the European market grew at about
the same rates as oil prices in January-September
2005. The prices of natural gas and petroleum
products in Europe were on average 47% higher
than in the same period of 2004. The prices of die-
sel fuel on the European market went up 52%, fuel
oil 46% and petrol 29%. The price of natural gas
in Europe rose 31% in September 2005 on Decem-
ber 2004 and the prices of petroleum products
increased 64% on average (the price of fuel oil
grew 100%, diesel fuel 52% and petrol 49%).
The growth of world non-energy prices
slowed down; however, they continued to regis-
ter high growth rates. Ferrous metal prices rose
16% in January-September 2005 year on year
(54% in January-September 2004). Non-ferrous
metal prices increased 12% on average (33% in
January-September 2004). The prices of alu-
minium were up 10% (20%), copper 24% (65%)
and nickel 13% (58%). Ferrous metal prices grew
7.7% on average in September 2005 on Decem-
ber 2004 (53% in September 2004) and non-fer-
rous metal prices went up 2.4% (2.2%).
World food prices
7 remained at a high level
in the first nine months of 2005. The prices of beef
rose 6.3%, refined sugar 20.0% and raw sugar
29.2% in January-September 2005 year on year.
Pork prices increased 0.5% while poultry prices
went down 2.1% in January-August 2005 year on
year.
The prices of beef rose 2.2% in September
2005 on December 2004 (18.3% in September
2004), refined sugar 30.5% (21.0%) and raw
sugar 11.6% (24.9%). Pork prices went down
3.5% in August 2005 on December 2004 (they
rose 56.2% in August 2004) and poultry prices
grew 1.6% (16.1% in August 2004).
Balance of Payments
The favourable price situation on major ex-
port markets and the growth of external demand
for Russian commodities had a positive effect on
Russia’s balance of payments. According to pre-
liminary estimates, the current account surplus
5 Average prices are calculated on the basis of data provided daily by the international organisations: Reuters for oil, Petrole um
Argus for petroleum products (petrol, diesel fuel and fuel oil), the London Metal Exchange for non-ferrous metals (aluminium,
copper and nickel), the London Commodity Exchange for sugar. The average monthly prices of natural gas, beef and ferrous
metal price indices are calculated on the basis of data provided by the World Bank while the average monthly prices of pork and
poultry are based on data from the International Monetary Fund.
6 Closing price according to data provided by Reuters.
7 The average prices of raw and refined sugar are calculated on the basis of data provided daily by the London Commodity
Exchange; the average monthly prices of beef and mutton are based on data from the World Bank; the prices of other commod-
ities are based on data from the International Monetary Fund.
2005 Q3
rose to $69.1 billion in the first nine months of
2005 ($41.6 billion in the same period of 2004).
The exports of commodities reached their
record level for the nine months of the year for
the entire period of observations since 1994, to-
talling $178.4 billion or 38.4% more than in Janu-
ary-September 2004 ($128.9 billion). The value of
exported fuel and energy products (oil, petroleum
products and natural gas) increased 50%. The
imports of goods grew 27.7% to $85.6 billion in
the first nine months of 2005 as against $67.0 bil-
lion in January-September 2004. As exports grew
faster than imports, Russia’s trade surplus in-
creased by almost 1.5 times to $92.8 billion in Janu-
ary-September 2005 year on year ($61.9 billion in
January-September 2004).
The trade in services deficit rose to $10.3 bil-
lion in January-September 2005 from $10.1 billion
in January-September 2004. The export of services
is estimated at $18.0 billion and the import of ser-
vices at $28.3 billion.
The investment income deficit widened to
$12.2 billion in January-September 2005 from $9.1
billion in January-September 2004.
Residents’ foreign liabilities increased by
$28.8 billion as against $14.4 billion in January-
September 2004. The liabilities of the government
sector and monetary authorities contracted by
$19.5 billion (by $3.7 billion in January-September
2004) while the liabilities of the private sector,
which actively attracted foreign capital, expanded
by $48.3 billion (by $18.2 billion in January-Sep-
tember 2004).
The liabilities of the non-financial enter-
prise sector grew by $36.0 billion, the largest in-
crement for the period of observations since 1994.
They increased by 2.1 times faster in January-Sep-
tember 2005 than in January-September 2004.
Liabilities in the form of credits and loans contin-
ued to prevail in the structure of foreign invest-
ment to this sector. They rose by $17.4 billion in
January-September 2005 (by $11.0 billion in Janu-
ary-September 2004) and accounted for 48% of
foreign investment to the non-financial enterprise
sector. Direct foreign investment to that sector
grew by 2.9 times to an estimated $14.2 billion
(40% of foreign investment to that sector) and
portfolio investment increased by 3.2 times to $4.5
billion (12%).
The intensified foreign capital inflow to the
private sector was attributable to the improvement
of investment climate in Russia, after which in-
ternational rating agencies raised Russia’s rating
(Standard & Poor’s took a relevant decision in
January 2005, Fitch Ratings - in August and
Moody’s Investors Service - in October).
Residents’ foreign assets (net of reserve
assets) registered high growth rates: they in-
creased by $45.0 billion in January-September
2005 as against $32.7 billion in January-Septem-
ber 2004. The value of claims on non-residents by
the government sector and monetary authorities
increased by $5.1 billion (by $0.7 billion in the same
period of 2004) while private capital outflow from
Russia grew to $40.1 billion ($31.8 billion). Capital
outflow from the banking sector rose to $11.7 bil-
lion ($6.4 billion) and the investment of the non-
financial enterprise and household sector abroad
totalled $28.4 billion, a slight change as compared
with January-September 2004 ($25.4 billion).
As a result of all private sector operations,
net capital outflow contracted to $2.8 billion in
January-September 2005 ($17.5 billion in January-
September 2004). Net capital outflow from the
sector of non-financial enterprises and house-
holds was estimated at $3.4 billion ($11.9 billion).
Net capital outflow by banks equalling $5.6 bil-
lion in January-September 2004 gave way to net
capital inflow ($0.7 billion) in January-September
2005.
Russia’s international reserve assets
reached $159.6 billion as of October 1, 2005. Ac-
cording to an estimate, their amount would be
13 2005 Q3
Major Inflation Indicators
enough to finance the imports of goods and ser-
vices during 12.6 months (9.3 months as of the
beginning of October 2004).
Russia’s foreign debt calculated by the in-
ternational methodology was estimated at $230.3
billion as of July 1, 2005 and rose 7.1% or by $15.2
billion as compared with January 1, 2005. The for-
eign debt of the government and monetary au-
thorities declined 5.1% or by $5.4 billion while the
private sector’s foreign debt rose 18.8% or by
$20.6 billion. The share of the private sector’s debt
in Russia’s total foreign debt increased from 51%
to 56%. The growth of the private sector’s for-
eign liabilities was largely attributable to an in-
crease in the debt of non-financial enterprises,
especially their debt on loans.
Internal Conditions
In January-September 2005, the macroeco-
nomic situation was characterised by the growth
of production in the key economic sectors, the
expansion of consumer spending and the high
level of investment activity. Output in the key
sectors of the economy rose 5.7% in January-
September 2005 as against 7.2% in January-Sep-
tember 2004.
Industrial production expanded 4.0% in the
first nine months of 2005 (7.4% in the same pe-
riod of 2004). The slowing of industrial output
growth during that period was due to the year-
on-year slowdown of production growth in the
manufacturing sector (from 8.9% in January-Sep-
tember 2004 to 6.1% in January-September 2005)
and in mining (from 7.2% to 1.0%).
Agricultural output increased 2.6% in Janu-
ary-September 2005 year on year (3.2% in Janu-
ary-September 2004).
Freight transport’s turnover expanded 2.4%
in January-September 2005 as compared with the
same period of 2004 (7.1% in January-Septem-
ber 2004). The freight turnover of railway trans-
port increased 2.4%, automobile transport 8.6%
and pipeline transport 2.4%.
In January-September 2005, household
real disposable money income grew 9.3% year
on year (8.6% in January-September 2004).
The growth of nominal and real wages, typi-
cal of the past two years, continued in 2005 as
the minimum pay was increased from 600 to 720
rubles since January 1, 2005 and from 720 to 800
rubles since September 1, 2005. According to pre-
liminary data, the average monthly nominal im-
puted wage increased 8.7% in real terms in Janu-
ary-September 2005 year on year (13.2% in Janu-
ary-September 2004) and stood at 8,189 rubles.
According to preliminary data, the average
monthly pension rose 8.5% in real terms in Janu-
ary-September 2005 year on year (6.1% in Janu-
ary-September 2004) and equalled 2,306 rubles.
Pension grew as the basic part of pension in-
creased by 240 rubles since March 1, 2005 to 900
rubles. Pension also grew as its basic and insur-
ance parts went up 6% and 10.8% respectively
since August 1, 2005.
As was the case in 2004, consumer spend-
ing continued to grow faster than household
money income in January-September 2005. Ac-
cording to an estimate, consumer spending in-
creased 25.1% in January-September 2005 as
compared with the same period of 2004 (23.0%
in January-September 2004). The growing con-
sumer demand amid the persisting gap between
wage and labour productivity was conducive to
price growth.
Despite the growth of household money in-
come, the share of household expenses on goods
and services continued to be considerable. Thus,
this share was 72.6% in January-September 2005
as against 71.1% in the same period last year. At
the same time, the share of expenses on services
rose to 17.6% from 16.8% in January-September
2004. The relatively high rates of growth in the
2005 Q3
prices of paid services contributed to the increase
of this share.
The public propensity for organised sav-
ings increased by 0.1 percentage points in Janu-
ary-September 2005 year on year and stood at
10.1%.
The situation observed in January-Septem-
ber 2005 contributed to the active investment ac-
tivity of organisations. Fixed capital investment
expanded 9.9% in the first nine months of 2005
as compared with the same period of 2004 (it
grew 11.5% in January-September 2004).
The situation on the labour market im-
proved in January-September 2005 as compared
with the same period of 2004. Employment stood
at 92.6% of the total economically active popula-
tion and 7.4% were classified as unemployed ac-
cording to ILO methodology (91.8% and 8.2%
respectively in January-September 2004).
In January-September 2005, the pressure
put on consumer prices by costs (especially the
costs of material resources) was less significant
than in January-September 2004 but continued to
be considerable. Mining prices rose 45.9% in Sep-
tember 2005 on December 2004 (51.0% in Sep-
tember 2004) amid the rise in oil prices and the
increase in basic tax rates for oil and gas produc-
tion from January 1, 2005. As last year, producer
prices in the mining sector grew faster than in the
manufacturing industries. Manufacturing pro-
ducer prices rose 7.2% in January-September 2005
as against 18.2% in January-September 2004.
The prices of the production and distribu-
tion of electricity, gas and water grew 12.8% in
September 2005 on December 2004 or by 0.2 per-
centage points faster than in the same period last
year.
Freight transportation charges rose 22.5%
in the first three quarters of 2005 (11.4% in the
same period of 2004). Railway transport fares in-
creased 13.3% as against 12.6% in the same pe-
riod last year.
According to Rosstat’s updated figures, in
January-September 2005, the growth rate in
profit net of loss of companies in the mining sec-
tor stood at 79.0%, in manufacturing industries
21.0% and in the production and distribution of
electricity, gas and water 61.0%.
Competition, including one put up by im-
porters, continued to affect pricing in manufac-
turing industries largely oriented to consumer de-
mand. Thus, producer prices in the production of
foodstuffs (including beverages) and tobacco,
textiles and clothing, leather, leather articles and
footwear grew slower in January-September 2005
than in manufacturing industries as a whole. In the
first nine months of 2005, output in the textile and
garment industry and the production of leather,
leather goods and footwear was smaller than in
the same period last year. According to Rosstat’s
data, in January-July 2005, profits (profits net of
losses) of companies producing foodstuffs (in-
cluding beverages) and tobacco increased 6.1%
year on year and profits of companies manufac-
15 2005 Q3
Major Inflation Indicators
turing leather, leather goods and footwear rose
25.9%. The textile and garment industry operated
at a loss unlike the situation in January-July 2004.
The price growth in manufacturing indus-
tries, which turn out goods for the consumer
goods market, did not accelerate in the first nine
months of 2005 as compared with the same pe-
riod last year. Thus, the growth of producer prices
slowed down from 8.3% in January-September
2004 to 2.8% in January-September 2005 in the
food industry, from 6.4% to 3.5% in the textile
and garment industry and from 6.6% to 6.3% in
the production of leather, leather goods and foot-
wear.
According to estimates, growth in the prices
of producers, which turn out goods directly for the
consumer goods market, accounted for 2.3 per-
centage points of growth in the prices of goods
and services included in the core inflation calcula-
tion in January-September 2005 (4.5 percentage
points in January-September 2004).
According to data of the Institute for the
Economy in Transition, the inflationary expec-
tations of managers of leading industrial enter-
prises were somewhat lower on average in the first
nine months of 2005 than in the same period last
year. Thus, in January-September 2005, 17-38%
of the respondents expected selling prices to grow
as against 24-40% in the first nine months of
2004. Lower inflationary expectations were ob-
served in 2005 (from 38% in January to 17% in
September) as prices largely grew in the first
months of 2005 and most respondents do not
expect the prices of their products to rise in the
near future.
17 2005 Q3
Quantitative and Qualitative Monetary Indicators
Quantitative and Qualitative Monetary Indicators
Exchange Rate
The dollar and the euro depreciated against
the ruble on the Russian foreign exchange mar-
ket in 2005 Q3. Considerable exchange rate fluc-
tuations in Q3 reflected the situation on world
foreign exchange markets.
The dollar’s appreciation against the ruble
observed for most of the previous quarter came
to a halt in early July. Although the US currency
started to weaken, the dollar/ruble average rate
appreciated 1.5% in 2005 Q3. The average
monthly dollar/ruble rate gained 0.6% in July
month on month and stood at 28.69 rubles to the
dollar. It depreciated 0.7% in August (to 28.48
rubles to the dollar) and 0.4% in September (to
28.36 rubles to the dollar). The dollar depreciated
on the Russian foreign exchange market due to
the speculative sentiments of its players reflect-
ing the situation on the world foreign exchange
markets. The dollar weakened against the euro
and other currencies due to the unstable situation
in the USA caused by the hurricane and the rise in
world oil prices to $70 per barrel.
The euro’s depreciation against the ruble
slowed down in 2005 Q3 due to the appreciation
of the single European currency in early August
and September. The average monthly euro/ruble
rate stood at 34.58 rubles to the euro in July (a
decline of 0.4% month on month), 35.02 rubles
to the euro in August (an increase of 1.3%) and
34.84 rubles to the euro in September (a fall of
0.5%). The average monthly euro/ruble rate de-
preciated 1.7% in 2005 Q3 as a whole.
In 2005 Q3, the Bank of Russia adjusted
again the structure of its currency basket : on
August 1, it set the dollar/euro basket at the ratio
of 6.5 to 3.5.
The Bank of Russia continued to participate
in forex trade on the domestic market being ori-
ented mainly to world currencies’ fluctuations and
the structure of its currency basket. As a result,
the ruble appreciated 0.4% against the currency
basket at the end of the quarter.
In 2005 Q3, the ruble’s real rate against
the euro continued its appreciation, which began
in December 2004, however, this growth slowed
down. The ruble’s real rate against the euro rose
2.4% in 2005 Q3 as a whole (5.3% in Q1 and 5.9%
in Q2).
The ruble’s real rate against the dollar
depreciated 1.5% in 2005 Q3 quarter on quarter.
During the third quarter, the ruble’s real rate was
observed to appreciate against the dollar only in
August (0.1%). In July and August 2005, it depre-
ciated 0.6% and 0.5% respectively.
In 2005 Q3, the ruble’s real effective rate
grew slower against foreign currencies: it appre-
ciated 0.8% quarter on quarter as against 3.7%
2005 Q3
in Q2. The ruble’s real effective rate fell 0.8% in
August and rose 0.4% in July and 0.1% in Sep-
tember. The considerable appreciation of the
ruble’s real effective rate has been observed since
December 2004. During three quarters of 2005,
the ruble’s real effective rate has appreciated
8.3%.
In 2005 Q3, the Bank of Russia took mea-
sures to smooth the sharp fluctuations of foreign
exchange rates against the ruble within the frame-
work of the managed floating exchange rate re-
gime. As a result, Russia’s international reserve
assets grew by $7.9 billion or 5.3% in 2005 Q3. As
Russia made foreign debt payments during the
period, the growth of international reserve assets
slowed down as compared with the previous quar-
ter (they grew 10.3% in 2005 Q2).
International reserve assets contracted
4.6% in July and expanded 3.5% in August and
6.5% in September. On the whole, Russia’s inter-
national reserve assets have grown by more than
$35 billion or about 28.1% since the beginning of
the year.
Interest Rates
As commercial banks’ ruble liquidity in-
creased and the ruble/dollar nominal rate was
relatively stable in 2005 Q3, financial market par-
ticipants displayed interest in investing in ruble-
denominated assets. Amid the seasonal slowdown
of inflation, there was no single trend in interest
rate dynamics in July-September 2005 while the
volumes of operations in the major segments of
the financial market expanded.
The limits of the interest rate band on
Bank of Russia operations were unchanged in
2005 Q3 and equalled 0.5% p.a. on tom-next de-
posits and 13% p.a. on overnight credits. The av-
erage-weighted interest rates remained at 2.0%
p.a. on deposit auctions for a term of 4 weeks and
equalled 3.7% p.a. on deposit auctions for a term
of 3 months or slightly higher as compared with
the previous quarter. The average-weighted yield
on Bank of Russia bonds (OBR) ranged from 3.8%
p.a. to 4.63% p.a.
The average rate on repo operations as the
major market instrument of liquidity provision
equalled 6.2% in 2005 Q3 and was slightly lower
than in the previous quarter.
Money market interest rates and rates on
commercial banks’ operations were within the
Bank of Russia’s interest rate band in 2005 Q3. The
MIACR on overnight ruble credits ranged from
0.9% p.a. to 7.1% p.a. in July-September (from
0.8% p.a. to 9.7% p.a. in the previous quarter).
The market interest rate on credits ex-
tended to non-financial enterprises with all
maturities dropped by 0.9 percentage points in
July month on month to 10.3% p.a. In the subse-
quent months, this interest rate was observed to
rise and stood at 10.7% p.a. in September. In 2005
Q3, the price of credits with all maturities fell by
0.28 percentage points on average, quarter on
quarter, after the interest rates on 1-year credits
dropped by 0.41 percentage points on average. At
the same time, the interest rates on 1 to 3-year
credits rose by 1.49 percentage points on average.
1 to 3-year loans remained the most expensive
credit resources in July and August.
The growing demand for credits from
households, along with high cost of consumer
lending and easier competition, enables banks to
keep interest rates on credits to individuals higher
than on credits to enterprises. In September, the
interest rate on credits to households with all
maturities rose to 20.7% p.a. from 19.6% p.a. in
June. As compared with Q2, the average quarterly
interest rate on credits to households with all ma-
turities increased by 0.7 percentage points in Q3
to 20.4% p.a., registering the highest increase on
3 to 6-month credits (by 2.9 percentage points to
22.5% p.a.). Credits with a maturity of over 3 years
were the only credits granted to households whose
price fell in Q3 as compared with Q2: their aver-
19 2005 Q3
Quantitative and Qualitative Monetary Indicators
age quarterly rate dropped by 0.5 percentage
points to 17.2% p.a.
The interest rate on household time de-
posits dropped to 6.2% p.a. in September as
against 8.3% p.a. in June. The average interest rate
on household time deposits was 7.1% p.a. in 2005
Q3 or 1.1 percentage points lower than in 2005 Q2.
As before, deposits with a maturity of 6 to 12
months registered the highest interest rates in
2005 Q3 while their average quarterly values fell
by 0.3 percentage points. As compared with Q2,
deposits with a maturity of 1-7 days registered the
largest decline in average quarterly rates (by 1.6
percentage points) in Q3 due a considerable fall
in interest rates on the money market.
The yield curve of banks’ lending operations
retained its rising slope in 2005 Q3. However, the
curve’s slope flattened due to lower interest rates
on banks’ lending operations with a maturity of 6
to 12 months and higher interest rates on opera-
tions with a maturity of 1 to 3 years. The interest
rates on banks’ lending operations with a matu-
rity of up to 1 year went down in Q3 quarter on
quarter, as a result, the yield curve in this sector
moved downward. The curve’s positive incline in
the 3 months to 1 year sector slightly narrowed
while the curve’s slope in the over 1 year sector
changed its direction. The term structure of inter-
est rates on banks’ lending operations shows that
market operators’ short-term inflationary expec-
tations slightly weakened.
2005 Q3
The yield on government bonds was
stable in July and was observed to fall consider-
ably in August-September. The prices of the long-
est-dated issues grew at the fastest rate. The
yields of OFZ bonds fluctuated within the range
of 0.86 percentage points in 2005 Q3. The aver-
age quarterly effective indicator of the OFZ mar-
ket portfolio dropped to 7.70% p.a. in Q3 from
8.04% p.a. in Q2. The effective indicator of the
OFZ market portfolio fell by 0.83 percentage
points by the end of September as compared with
the end of June to 7.19% p.a.
The government bond yield curve kept its
rising slope in the reporting period. A decrease in
yields in Q3 caused the curve to move downwards.
In the reporting period, the yield curve slope flat-
tened as the yields of instruments with different
maturities evened out. At the end of September,
the rising yield curve sector was limited to 7 years
to maturity. As before, the OFZ bonds yield curve
in the over 11 years sector deviated noticeably from
the flattened yield curve line due to debt depre-
ciation of these issues (their yields are directly pro-
portional to duration instead of their term to re-
demption). No inflation risk premium was in-
cluded in the prices of short-term government
bonds. The medium- and long-term inflationary
expectations of OFZ bond market players de-
creased. Investors’ assessments of the reliability
and liquidity of ruble-denominated government
bonds for all terms were actually unchanged.
In 2005 Q3, the interest rate structure by
instrument remained balanced enough. The yield
curves of key financial instruments had a normal
shape suggesting that the yield on financial instru-
ments was in direct proportion to their maturity
periods. The inflationary expectations of Rus-
sian financial market players were slightly lower.
Money Supply
In 2005 Q3, annualised M2 growth in-
creased to 42% from 33.6% as of July 1, 2005. In
July-September 2005, the M2 growth was season-
ally slower than in the second quarter and equalled
7.4%. However, this growth considerably ex-
ceeded the M2 increase in the same period last
year and the third quarter average growth since
1999.
Annualised M2 growth accelerated in 2005
Q2 and Q3 and exceeded demand for ruble sup-
21 2005 Q3
Quantitative and Qualitative Monetary Indicators
1 This gap characterises the part of monetary growth that exceeds the amount necessary to finance the expanded volume of
transactions. Its increase can testify to the inflationary pressure of money supply growth on price dynamics.
ply projected for 2005 (28-32%). Money supply
may exert upward pressure on prices. Taking ac-
count of existing lags, major influence on core in-
flation will be exerted since 2005 Q4.
The current money supply growth will af-
fect core inflation in the first half of 2006. Ac-
cording to estimates, M2 grew slower in October
2005 than in October 2004 and, therefore, the
trend towards the accelerated money supply
growth may be reversed. At the same time, the
intensity of the seasonal peak of money supply
growth in December will have considerable influ-
ence in this process. Given that the trend towards
the slower annualised M2 growth continues to
persist, the monetary pressure on inflation pro-
cesses can weaken by the end of the first half of
2006. Core inflation influenced by the monetary
dynamics of the previous months will reach 8.5-
9% by early January 2006.
The gap between M2 and GDP growth
rates
1, which sharply narrowed in the previous
year, increased in 2005 Q3 quarter on quarter. The
gap between the growth rates of GDP and the
M2X broader monetary aggregate comprising
economic agents’ foreign currency non-cash
funds also widened in 2005 Q3. Money velocity
dynamics are essential to assess the influence of
this gap on inflation. In July-September 2005,
money velocity fell 1.7% (0.6% in 2004 Q3).
Therefore, the slowing of decline in money veloc-
ity observed from the second half of 2004 came
to a halt and in Q3 money velocity declined faster
under the influence of money supply structural
changes and the persisting demand for foreign
currency. The money velocity dynamics deviated
from the medium-term trend. This can be inter-
preted as increased inflationary pressure, given
that the annualised money supply growth stays
at the current level.
The money aggregate in the monetary
survey definition (similar to the M1 aggregate),
which includes the most liquid transactional com-
ponents of money supply, reflects economic situ-
ation and liquidity preferences. In 2005 Q3, as
compared with Q2, its dynamics were largely de-
2005 Q3
termined by the accelerated growth of the
aggregate’s non-cash component.
Following the seasonal trends of the past
few years, cash growth slowed down in 2005 Q3
quarter on quarter to 5.5%. At the same time, as
in 2005 Q2, the M0 grew faster in July-Septem-
ber 2005 year on year. As a result, cash grew faster
in the first nine months of 2005 (13.4%) than in
the same period last year (12.8%).
Annualised M0 growth increased from
29.4% to 34.6% in July-September 2005 as
against 26.1% in January 2005 but was lower than
in the same period last year.
Cash growth was largely attributable to the
continued increase in household money income.
In particular, non-interest expenditures of the
consolidated budget grew faster over that period
than last year.
Households’ persisting demand for foreign
currency cash restrained cash growth. Households’
net demand for foreign currency cash was higher
in 2005 Q1 and Q2 than in the same periods of
2004 but lower in 2005 Q3. At the same time, it
should be noted that households’ strong demand
for foreign currency cash in 2004 Q3 was largely
caused by the unstable situation in the banking
sector due to the crisis of confidence in banks.
Households’ net demand for foreign cur-
rency cash was higher in the first nine months of
2005 than in the respective periods of 2001-2003.
At the same time, despite the increase in the
annualised cash growth in January-September
2005, the cash share in the M2 structure was less
considerable in the first nine months of 2005 than
in the previous years. This was to a certain extent
attributable to the resumed growth of time de-
posits denominated in the national currency re-
sulting from the increase in household money in-
come. At the same time, the persisting increase in
annualised M0 growth (in particular, due to the
accelerated growth of budget non-interest expen-
ditures) can make it more difficult for the gov-
ernment to achieve inflation targets both this year
and next year.
The annualised growth rates in the M1 non-
cash component exceeded cash growth rates in
2005 Q3; they increased from 29.8% to 45.3%
and were considerably higher than in the same
period last year. The M1 non-cash component is
comprised by about 80% of non-financial enter-
prise sector funds and its increase reflects eco-
nomic agents’ rising demand for money to con-
duct transactions and service the payment turn-
over.
As funds in transactional accounts and cash
somewhat accelerated, the rates of growth in the
money aggregate in the monetary survey defini-
tion grew from an annualised 29.1% as of Octo-
ber 1, 2004 to 39.6% as of October 2005. The
growth rates in quasi-money (it comprises less
liquid components of money supply used by eco-
nomic agents as savings) were considerably higher
in 2005 Q3 than in the same period last year (39%
as of October 1, 2005 as against 29% as of Octo-
ber 1, 2004) and were about the same as the
growth rates in the money aggregate.
23 2005 Q3
Quantitative and Qualitative Monetary Indicators
The quasi-money dynamics that emerged by
the beginning of October were determined by the
faster growth in time deposits representing the
ruble component of quasi-money . In July-Sep-
tember, the annualised growth rates in time de-
posits accelerated by 5 percentage points to
46.4% but failed to exceed the growth rates as
of the beginning of the year and as of the same
date in 2004. The resumed acceleration of
annualised growth in time deposits denominated
in the national currency implies that money sup-
ply growth exerts weaker pressure on inflation.
The rates of growth in foreign currency
deposits representing the other component of
quasi-money were unstable in 2005 Q3 but as a
whole remained at the level of the previous quar-
ter.
Economic agents’ unsteady currency pref-
erences and the respective change in demand for
the national currency and foreign exchange caus-
ing the reciprocal flow of ruble and foreign cur-
rency funds were among the factors that deter-
mined the monetary aggregate dynamics in 2005
Q3. The rates of growth in the ruble monetary
aggregates (M1 and M2) accelerated more con-
siderably as compared with the dynamics of the
M2X and M2Y aggregates, which include non-fi-
nancial agents’ foreign currency. Thus, the rates
of growth in M2X increased from an annualised
32.4% as of July 1, 2005 to 39.3% as of October 1,
2005. The rates of growth in M2Y accelerated by
almost 4 percentage points in annual terms in July-
September 2005. The dynamics of the M2Y no-
tional broad aggregate continued to demonstrate
a long-term upward trend. The annualised M2Y
growth rates were faster as of October 1, 2005
(29.4%) than as of the beginning of the year
(24.4%) and as of the same date last year (20%).
The dollarisation coefficient, the share of
the foreign currency component of the money
supply in the monetary survey definition (M2X),
was unchanged in 2005 Q3, equalling 18.1% as of
October 1, 2005 (in the same period last year, it
rose by 0.7 percentage points to 19.6%). At the
same time, the ruble component of quasi-money
continued to predominate in M2X (29.7% as of
October 1, 2005 as against 28.3% as of October 1,
2004).
The development of the process of the Rus-
sian economy’s dedollarisation is also
characterised by changes in the M2Y aggregate
structure. Thus, the share of the foreign currency
component of this notional broad aggregate
dropped by 1.1 percentage points in 2005 Q3
largely due to a contraction in the share of for-
eign currency cash. The share of all foreign cur-
rency funds in the M2Y broad aggregate was
smaller in 2005 Q3 than in the same period last
year.
The dynamics of enterprise and household
funds drawn by banks in rubles and foreign cur-
rency (an annualised 41.1% as of October 1, 2005),
which serve as the basis for the expansion of lend-
ing, matched the increase in loans to the real sec-
tor (41.1% as of October 1, 2005). At the same
time, in 2005 Q3, the growth in the banking
2005 Q3
sector’s claims on the non-financial sector of
the economy was slightly slower than in the pre-
vious quarter (it totalled 448 billion rubles in July-
September) but faster than a year ago. The role
of credit to non-financial enterprises and house-
holds as a source of aggregate money supply ex-
pansion increased in 2005 Q3.
The large-scale increase in the general
government deposits, caused by the expansion
of the Stabilisation Fund, had a serious restrain-
ing effect on money supply growth during the first
three quarters of 2005. The Stabilisation Fund to-
talled 960.7 billion rubles as of October 1, 2005.
The monetary base (broad definition) con-
tracted 6.7% in January-September 2005 as com-
pared with 4.5% in the same period last year. In
July-September 2005, the monetary base rose
10.2% (it narrowed 4.8% in 2004 Q3). The share
of credit institutions’ funds in correspondent ac-
counts with the Bank of Russia increased in July-
September from 12.2% to 14.9% (it also slightly
expanded in the same period last year). The share
of credit institutions’ funds absorbed by the Bank
of Russia through its deposits and OBR operations
rose from 5.5% to 5.9% in the monetary base over
the quarter and from 11.4% to 12.1% taking into
account the credit institutions’ required reserves.
25 2005 Q3
Statistical Addendum
Statistical Addendum
Consumer prices by group
of goods and services (month on month, %)
Monthly inflation Core inflation Food price growth
Growth in food
prices net of
vegetable prices
Vegetable and
fruit price growth
Non-food price
growth
Service price
growth
January 2.4 1.2 2.5 1.3 13.1 1.1 4.4
February 1.6 0.9 1.2 0.8 4.1 0.9 4.2
March 1.1 0.7 1.0 0.6 3.9 0.8 1.7
April 1.0 0.6 1.0 0.5 4.2 0.6 1.8
May 0.8 0.6 0.7 0.4 2.5 0.6 1.5
June 0.8 0.6 0.8 0.6 2.3 0.5 1.2
July 0.7 0.7 0.4 0.7 -1.8 0.5 1.9
August -0.4 0.7 -1.4 0.8 -17.2 0.6 0.7
September 0.3 1.1 -0.2 1.1 -11.2 0.9 0.9
October 1.0 1.4 1.1 1.8 -5.6 1.0 0.8
November 1.0 1.1 1.2 1.3 1.0 0.8 0.4
December 1.1 1.0 1.5 1.2 4.1 0.6 0.9
Full year (December on
December)
12.0 11.2 10.2 11.8 -4.2 9.2 22.3
January 1.8 0.9 1.6 1.3 5.5 0.5 4.1
February 1.0 0.8 1.1 1.1 1.5 0.4 1.6
March 0.8 0.7 1.1 0.9 2.8 0.4 0.6
April 1.0 0.8 0.8 1.0 -0.6 0.6 2.0
May 0.7 0.6 0.4 0.5 -0.7 0.8 1.4
June 0.8 0.5 0.8 0.4 4.8 0.7 0.9
July 0.9 0.8 1.0 1.0 1.5 0.6 1.3
August 0.4 0.7 0.1 0.8 -6.3 0.5 1.0
September 0.4 0.9 0.0 0.9 -9.0 0.9 0.6
October 1.1 1.3 1.4 1.7 -2.7 0.7 1.2
November 1.1 1.1 1.5 1.5 2.2 0.7 0.8
December 1.1 1.0 1.7 1.4 5.4 0.4 1.0
Full year (December on
December) 11.7 10.5 12.3 13.1 3.3 7.4 17.7
January 2.6 0.9 1.4 1.1 5.1 0.4 8.8
February 1.2 0.7 1.4 0.9 6.1 0.4 2.2
March 1.3 0.8 2.1 1.1 11.2 0.4 1.2
April 1.1 0.9 1.7 1.3 5.4 0.5 0.8
May 0.8 0.6 1.1 0.7 4.1 0.4 0.8
June 0.6 0.5 0.7 0.4 3.3 0.3 0.9
July 0.5 0.5 0.3 0.5 -1.8 0.4 0.9
August -0.1 0.5 -1.0 0.5 -12.9 0.5 0.8
September 0.3 0.8 -0.7 0.6 -11.6 1.1 0.9
2005 Q3
Consumer prices by group of goods and services
(since start of year on accrual basis, %)
Monthly inflation Core inflation Food price growth
Growth in food prices
net of vegetable
prices
Vegetable and fruit
price growth
Non-food price
growth Service price growth
January 2.4 1.2 2.5 1.3 13.1 1.1 4.4
February 4.1 2.1 3.7 2.2 17.8 2.0 8.8
March 5.2 2.8 4.8 2.8 22.4 2.8 10.6
April 6.2 3.4 5.8 3.3 27.6 3.5 12.6
May 7.1 4.0 6.5 3.8 30.8 4.1 14.2
June 7.9 4.7 7.4 4.4 33.7 4.6 15.6
July 8.7 5.4 7.8 5.1 31.4 5.1 17.8
August 8.3 6.2 6.3 6.0 8.7 5.7 18.7
September 8.6 7.3 6.1 7.1 -3.4 6.6 19.7
October 9.7 8.9 7.3 9.1 -8.9 7.7 20.7
November 10.8 10.1 8.6 10.4 -7.9 8.6 21.2
December 12.0 11.2 10.2 11.8 -4.2 9.2 22.3
January 1.8 0.9 1.6 1.3 5.5 0.5 4.1
February 2.8 1.7 2.8 2.3 7.1 0.9 5.8
March 3.5 2.4 3.8 3.2 10.1 1.4 6.4
April 4.6 3.2 4.7 4.2 9.5 2.0 8.5
May 5.3 3.8 5.2 4.8 8.7 2.8 10.0
June 6.1 4.3 6.0 5.2 13.9 3.4 11.0
July 7.1 5.1 7.1 6.2 15.6 4.0 12.5
August 7.6 5.8 7.2 7.1 8.3 4.6 13.6
September 8.0 6.8 7.2 8.0 -1.4 5.5 14.3
October 9.3 8.1 8.7 9.9 -4.0 6.3 15.7
November 10.5 9.3 10.4 11.5 -1.9 7.0 16.6
December 11.7 10.5 12.3 13.1 3.3 7.4 17.7
January 2.6 0.9 1.4 1.1 5.1 0.4 8.8
February 3.9 1.7 2.8 2.0 11.5 0.7 11.2
March 5.3 2.4 4.9 3.1 24.0 1.1 12.6
April 6.5 3.3 6.7 4.4 30.8 1.6 13.5
May 7.3 4.0 7.9 5.1 36.1 2.1 14.4
June 8.0 4.4 8.6 5.5 40.6 2.4 15.4
July 8.5 5.0 8.9 6.1 38.0 2.8 16.5
August 8.3 5.5 7.8 6.6 20.2 3.4 17.4
September 8.6 6.3 7.1 7.2 6.2 4.5 18.5
27 2005 Q3
Statistical Addendum
Consumer prices by group of goods and services
(month on month of previous year, %)
Inflation over period Core inflation* Food price growth*
Growth in food prices
net of vegetable
prices*
Vegetable and fruit
price growth
Non-food price
growth* Service price growth*
January 14.3 9.9 10.7 8.5 29.3 10.7 32.3
February 14.8 10.0 11.0 8.8 30.4 10.9 34.2
March 14.8 10.2 11.6 9.2 33.1 11.0 31.6
April 14.6 10.2 11.5 9.5 30.4 10.8 30.8
May 13.6 10.2 9.9 9.5 16.2 10.2 31.4
June 13.9 10.5 11.0 10.1 21.1 9.6 30.9
July 13.9 10.2 10.9 9.8 22.7 9.5 31.1
August 13.3 10.5 10.7 10.3 13.1 9.4 28.8
September 13.3 10.8 11.3 11.0 11.5 9.4 26.4
October 13.2 11.4 11.9 12.1 6.5 9.4 24.3
November 12.5 11.3 11.0 11.8 1.2 9.3 22.5
December 12.0 11.2 10.2 11.8 -4.2 9.2 22.3
January 11.3 11.0 9.2 11.7 -10.7 8.6 21.9
February 10.6 10.8 9.2 12.0 -12.9 8.0 18.9
March 10.3 10.8 9.2 12.2 -13.8 7.6 17.5
April 10.2 11.0 9.1 12.7 -17.8 7.6 17.8
May 10.2 11.0 8.9 12.9 -20.4 7.8 17.7
June 10.1 10.9 8.8 12.6 -18.4 7.9 17.4
July 10.4 11.0 9.5 12.9 -15.7 8.0 16.7
August 11.3 10.9 11.1 12.9 -4.6 8.0 17.0
September 11.4 10.7 11.3 12.7 -2.2 8.1 16.8
October 11.5 10.5 11.7 12.7 0.9 7.8 17.3
November 11.7 10.4 12.0 12.9 2.0 7.6 17.7
December 11.7 10.5 12.3 13.1 3.3 7.4 17.7
January 12.7 10.4 12.1 12.9 3.0 7.3 23.1
February 13.0 10.4 12.4 12.6 7.6 7.2 23.8
March 13.6 10.5 13.5 12.9 16.4 7.1 24.6
April 13.8 10.6 14.5 13.2 23.4 7.0 23.1
May 13.8 10.6 15.2 13.3 29.3 6.6 22.4
June 13.7 10.6 15.1 13.4 27.5 6.3 22.4
July 13.2 10.3 14.2 12.9 23.4 6.2 21.9
August 12.5 10.1 12.9 12.5 14.7 6.1 21.6
September 12.3 10.0 12.1 12.1 11.3 6.3 22.0
* Bank of Russia's estimate.
2005 Q3
Inflation Growth Structure (percentage points)
Inflation growth over period since start of year due to changes
in prices by group of goods and services
Foodstuffs* Non-food products Paid services Vegetables and fruit Inflation over
period, % Core inflation Non-core inflation**
January 0.7 0.3 0.8 0.7 2.4 1.0 1.4
February 1.1 0.5 1.5 0.9 4.1 1.7 2.4
March 1.4 0.8 1.8 1.2 5.2 2.3 2.9
April 1.7 1.0 2.2 1.4 6.2 2.8 3.4
May 1.9 1.1 2.4 1.6 7.1 3.3 3.8
June 2.2 1.3 2.7 1.8 7.9 3.8 4.1
July 2.6 1.4 3.1 1.6 8.7 4.4 4.3
August 3.0 1.6 3.2 0.5 8.3 5.0 3.2
September 3.6 1.8 3.4 -0.2 8.6 6.0 2.7
October 4.5 2.1 3.5 -0.5 9.7 7.2 2.5
November 5.2 2.4 3.6 -0.4 10.8 8.2 2.6
December 5.9 2.5 3.8 -0.2 12.0 9.1 2.9
January 0.6 0.2 0.8 0.2 1.8 0.8 1.0
February 1.1 0.3 1.1 0.3 2.8 1.4 1.4
March 1.5 0.4 1.2 0.4 3.5 2.0 1.6
April 2.0 0.6 1.5 0.4 4.6 2.6 1.9
May 2.2 0.8 1.8 0.4 5.3 3.1 2.2
June 2.4 1.0 2.0 0.6 6.1 3.5 2.6
July 2.9 1.2 2.3 0.7 7.1 4.2 2.9
August 3.3 1.4 2.5 0.4 7.6 4.7 2.8
September 3.8 1.7 2.6 -0.1 8.0 5.5 2.5
October 4.6 1.9 2.9 -0.2 9.3 6.6 2.7
November 5.4 2.1 3.0 -0.1 10.5 7.6 2.9
December 6.1 2.3 3.2 0.1 11.7 8.5 3.3
January 0.4 0.1 1.8 0.2 2.6 0.7 1.9
February 0.8 0.2 2.3 0.5 3.9 1.3 2.6
March 1.3 0.4 2.6 1.0 5.3 1.9 3.3
April 1.9 0.5 2.8 1.3 6.5 2.7 3.8
May 2.1 0.7 3.0 1.5 7.3 3.1 4.1
June 2.3 0.8 3.2 1.7 8.0 3.5 4.5
July 2.5 0.9 3.4 1.6 8.5 3.9 4.5
August 2.8 1.1 3.6 0.8 8.3 4.4 4.0
September 3.0 1.5 3.9 0.3 8.6 5.0 3.6
* Excluding vegetables and fruit.
** Growth in the prices of goods and paid services excluded from the core inflation calculation.
29 2005 Q3
Statistical Addendum
Monthly inflation growth due to changes
in prices by group of goods and services
Foodstuffs* Non-food products Paid services Vegetables and fruit Inflation over
period, % Core inflation Non-core inflation**
January 0.7 0.3 0.8 0.7 2.4 1.0 1.4
February 0.4 0.2 0.7 0.2 1.6 0.7 0.9
March 0.3 0.2 0.3 0.2 1.1 0.6 0.5
April 0.3 0.2 0.3 0.3 1.0 0.5 0.5
May 0.2 0.2 0.3 0.2 0.8 0.4 0.4
June 0.3 0.1 0.2 0.1 0.8 0.5 0.3
July 0.3 0.1 0.4 -0.1 0.7 0.5 0.2
August 0.4 0.1 0.1 -1.1 -0.4 0.6 -1.0
September 0.5 0.2 0.2 -0.6 0.3 0.9 -0.6
October 0.9 0.3 0.1 -0.3 1.0 1.2 -0.1
November 0.6 0.2 0.1 0.0 1.0 0.9 0.1
December 0.6 0.2 0.2 0.2 1.1 0.8 0.3
January 0.6 0.2 0.8 0.2 1.8 0.8 1.0
February 0.5 0.1 0.3 0.1 1.0 0.6 0.4
March 0.4 0.1 0.1 0.1 0.8 0.6 0.2
April 0.4 0.2 0.4 0.0 1.0 0.6 0.3
May 0.2 0.2 0.3 0.0 0.7 0.5 0.2
June 0.2 0.2 0.2 0.2 0.8 0.4 0.4
July 0.4 0.2 0.3 0.1 0.9 0.6 0.3
August 0.4 0.2 0.2 -0.3 0.4 0.5 -0.1
September 0.4 0.3 0.1 -0.4 0.4 0.7 -0.3
October 0.8 0.2 0.2 -0.1 1.1 1.0 0.2
November 0.7 0.2 0.2 0.1 1.1 0.9 0.2
December 0.6 0.1 0.2 0.2 1.1 0.8 0.3
January 0.4 0.1 1.8 0.2 2.6 0.7 1.9
February 0.4 0.1 0.5 0.3 1.2 0.6 0.7
March 0.5 0.1 0.3 0.5 1.3 0.6 0.7
April 0.5 0.2 0.2 0.3 1.1 0.7 0.4
May 0.3 0.1 0.2 0.2 0.8 0.5 0.3
June 0.2 0.1 0.2 0.2 0.6 0.4 0.3
July 0.2 0.1 0.2 -0.1 0.5 0.4 0.1
August 0.2 0.2 0.2 -0.6 -0.1 0.4 -0.5
September 0.2 0.4 0.2 -0.6 0.3 0.6 -0.4
* Excluding vegetables and fruit.
** Growth in the prices of goods and paid services excluded from the core inflation calculation.
2005 Q3
Contribution to Inflation Growth (%)
Contribution to inflation growth over period since start of year
by group of goods and services
Foodstuffs* Non-food products Paid services Vegetables and fruit Core inflation Non-core inflation**
January 27.5 12.4 31.6 28.5 40.6 59.4
February 26.7 13.4 37.1 22.8 41.8 58.2
March 27.3 14.9 35.3 22.5 44.2 55.8
April 27.0 15.3 34.7 23.1 44.9 55.1
May 26.9 15.9 34.5 22.7 46.1 53.9
June 28.1 16.0 33.7 22.2 47.9 52.1
July 29.7 16.2 35.2 18.8 50.2 49.8
August 36.5 19.1 38.9 5.5 60.7 39.3
September 41.6 21.2 39.3 -2.1 69.1 30.9
October 46.7 21.6 36.4 -4.7 74.3 25.7
November 48.5 21.7 33.6 -3.8 76.3 23.7
December 49.1 21.0 31.7 -1.8 75.9 24.1
January 33.8 8.6 43.5 14.0 43.2 56.8
February 40.0 10.2 38.3 11.5 50.0 50.0
March 42.9 11.7 32.8 12.7 55.3 44.7
April 43.5 13.3 34.0 9.2 57.5 42.5
May 42.4 15.9 34.4 7.3 58.5 41.5
June 39.8 17.2 32.9 10.1 57.2 42.8
July 40.9 17.3 32.1 9.8 58.8 41.2
August 43.8 18.4 32.8 4.9 62.6 37.4
September 47.0 21.1 32.7 -0.8 68.4 31.6
October 50.2 20.8 31.0 -1.9 70.9 29.1
November 51.5 20.4 28.9 -0.8 72.0 28.0
December 52.1 19.2 27.5 1.2 72.0 28.0
January 17.0 4.8 70.2 8.0 27.1 72.9
February 21.2 6.2 60.4 12.1 33.4 66.6
March 24.5 6.8 50.0 18.7 36.7 63.3
April 28.6 8.1 43.8 19.5 41.1 58.9
May 29.3 9.2 41.2 20.2 43.1 56.9
June 29.0 9.8 40.5 20.8 44.1 55.9
July 30.1 10.9 40.7 18.3 46.5 53.5
August 33.2 13.2 43.6 9.9 52.3 47.7
September 35.1 17.1 44.9 3.0 58.3 41.7
* Excluding vegetables and fruit.
** Growth in the prices of goods and paid services excluded from the core inflation calculation.
31 2005 Q3
Statistical Addendum
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 27.5 12.4 31.6 28.5 40.6 59.4
February 25.5 15.0 45.0 14.6 43.7 56.3
March 29.7 20.3 28.3 21.7 53.0 47.0
April 25.5 17.2 31.6 25.7 48.7 51.3
May 25.9 21.2 33.1 19.8 55.3 44.7
June 38.4 16.6 26.9 18.1 62.7 37.3
July 46.8 18.9 50.7 -16.4 74.7 25.3
August Estimate is impossible for negative value
September 164.8 72.9 50.5 -188.3 270.6 -170.6
October 86.6 25.6 14.2 -26.4 114.6 -14.6
November 63.8 23.3 8.4 4.5 94.1 5.9
December 53.8 14.2 15.1 16.9 71.7 28.3
January 33.8 8.6 43.5 14.0 43.2 56.8
February 50.7 13.1 29.1 7.1 61.8 38.2
March 52.8 17.0 13.3 16.9 74.2 25.8
April 45.7 19.0 38.2 -2.9 65.1 34.9
May 35.7 32.6 36.6 -4.9 64.9 35.1
June 22.1 25.8 23.1 29.1 48.2 51.8
July 47.5 17.6 27.3 7.5 68.1 31.9
August 89.6 37.7 44.9 -72.2 122.3 -22.3
September 100.3 67.0 30.2 -97.5 164.9 -64.9
October 70.5 18.9 20.3 -9.7 86.8 13.2
November 60.7 18.0 13.8 7.5 79.4 20.6
December 55.8 9.0 15.5 19.7 71.7 28.3
January 17.0 4.8 70.2 8.0 27.1 72.9
February 30.0 9.2 40.0 20.8 46.5 53.5
March 33.6 8.4 20.9 37.0 46.1 53.9
April 46.7 14.1 15.8 23.4 60.9 39.1
May 34.9 18.4 20.6 26.1 60.1 39.9
June 25.7 15.5 32.1 26.6 54.6 45.4
July 48.4 29.6 43.6 -21.6 86.0 14.0
August Estimate is impossible for negative value
September 92.7 141.5 83.9 -218.1 243.9 -143.9
* Excluding vegetables and fruit.
** Growth in the prices of goods and paid services excluded from the core inflation calculation.
2005 Q3
Major monetary indicators in 2005
1.01.05 1.02.05 1.03.05 1.04.05 1.05.05 1.06.05 1.07.05 1.08.05 1.09.05 1.10.05
Cash (M0), bn rubles 1,534.8 1,425.2 1,444.1 1,481.7 1,565.8 1,582.3 1,650.7 1,701.8 1,703.3 1,740.7
monthly growth rates, % 15.2 -7.1 1.3 2.6 5.7 1.1 4.3 3.1 0.1 2.2
growth rates since start of year, % -7.1 -5.9 -3.5 2.0 3.1 7.6 10.9 11.0 13.4
share in M2 structure, % 35.2 34.0 33.5 33.1 34.1 33.7 33.5 34.1 33.2 32.9
Non-cash funds (M2-M0), bn rubles 2,828.5 2,765.1 2,867.3 2,992.9 3,021.0 3,106.4 3,276.7 3,283.9 3,432.7 3,552.1
monthly growth rates, % 8.5 -2.2 3.7 4.4 0.9 2.8 5.5 0.2 4.5 3.5
growth rates since start of year, % -2.2 1.4 5.8 6.8 9.8 15.8 16.1 21.4 25.6
M2 monetary aggregate, bn rubles 4,363.3 4,190.3 4,311.4 4,474.6 4,586.8 4,688.6 4,927.4 4,985.8 5,136.0 5,292.8
monthly growth rates, % 10.7 -4.0 2.9 3.8 2.5 2.2 5.1 1.2 3.0 3.1
growth rates since start of year, % -4.0 -1.2 2.6 5.1 7.5 12.9 14.3 17.7 21.3
growth rates (month on month of previous year, %) 35.8 30.4 29.3 30.8 31.7 33.0 33.6 37.2 40.4 42.0
foreign currency deposits, bn rubles 935.1 993.6 1,033.2 1,024.9 1,007.7 1,054.9 1,090.6 1,101.5 1,154.4 1,167.9
monthly growth rates, % 0.9 6.3 4.0 -0.8 -1.7 4.7 3.4 1.0 4.8 1.2
growth rates since start of year, % 6.3 10.5 9.6 7.8 12.8 16.6 17.8 23.5 24.9
share in money supply structure in monetary survey definition, % 17.6 19.2 19.3 18.6 18.0 18.4 18.1 18.1 18.4 18.1
Money supply in monetary survey definition, bn rubles 5,298.7 5,184.8 5,344.4 5,499.6 5,594.0 5,743.0 6,015.9 6,087.4 6,286.5 6,458.4
monthly growth rates, % 8.9 -2.2 3.1 2.9 1.7 2.7 4.8 1.2 3.3 2.7
growth rates since start of year, % -2.2 0.9 3.8 5.6 8.4 13.5 14.9 18.6 21.9
M2 money velocity (in annualised terms) 4.6 4.6 4.6 4.6 4.6 4.5 4.5 4.5 4.5 4.4
change since start of year, % -0.3 -0.9 -1.5 -1.3 -1.9 -2.6 -2.7 -3.4 -4.3
Monetisation (M2 aggregate), % 21.6 21.7 21.8 21.9 21.9 22.0 22.2 22.2 22.3 22.5
Monetary base (broad definition) 2,386.3 2,150.1 2,266.0 2,256.1 2,243.5 2,269.1 2,308.8 2,347.9 2,423.4 2,545.1
monthly growth rates, % 14.5 -9.9 5.4 -0.4 -0.6 1.1 1.7 1.7 3.2 5.0
growth rates (on accrual basis), % -9.9 -5.0 -5.5 -6.0 -4.9 -3.2 -1.6 1.6 6.7
Multiplier (for monetary base in broad definition) 1.8 2.0 1.9 2.0 2.0 2.1 2.1 2.1 2.1 2.1
change since start of year, % 9.0 6.6 4.1 8.5 11.8 13.0 16.7 16.1 15.9 13.7
33 2005 Q3
Statistical Addendum
2005 Q3
35 2005 Q3
Statistical Addendum
2005 Q3
37 2005 Q3
Statistical Addendum
2005 Q3
© The Central Bank of the Russian Federation, 2005
Research and Information Department