How to contain the rise in prices

The government is preparing to build a system to counter the rise in world prices for socially important goods. it is based on economic models created by industry departments that describe the dependence of the cost of certain products and EXPORT goods on the Russian market on global inflation. In the event of an increase in world prices for these goods, the government through customs duties and tariffs will compensate for their impact on prices in RUSSIA.

The organization of work to create, maintain and promptly update models for monitoring and forecasting price dynamics in domestic markets is an example of the best international experience in terms of the work of financial and economic departments. The relevance of this area of ​​work is increasing in the context of a steady increase in inflation around the world, caused by the realization of pent-up demand, the disruption of global supply chains and excess free liquidity in the system. For example, inflation in the US in recent months has been holding its highs since mid-2008 (5.4% in annual terms), in the EU inflation has increased to 3.4% - such rates of price growth have not been observed in Europe for at least the past two decades.

Price pressure is observed across a wide range of commodities, industrial and agricultural products. According to Rosstat, in January-August 2021, the price of steel profiles purchased by construction organizations in Russia increased by more than 28%. The price of reinforcement for reinforced concrete structures was 41% higher. The most negative situation was observed in the Volga and Siberian Federal Districts, where the growth of more than two times was recorded for certain commodity items of metal products. The rise in prices on the Russian market was associated primarily with the dynamics of world steel prices, as well as the influence of certain local factors.

The dynamics of world prices can be tracked by quotations on the Shanghai Commodity Exchange, where hot-rolled steel prices in October 2021 were about $855 per ton, which is 52% higher than a year ago. Peak values ​​were observed in mid-May ($1027) and in the first days of August ($947), which are multi-year highs.

By October, prices corrected somewhat, but high prices on the world steel market persist. This dynamic is driven by pent-up demand for steel as the global economy recovers from the covid-19 pandemic, while the growth rate of steel production in the world lags behind the growth rate of demand. Severstal expects world steel prices to remain above average historical levels for another 2-3 years. In response, the government took new measures to support the construction industry and allowed to increase the price of a state contract for construction work by 30% as compensation for additional costs associated with a significant increase in the cost of building materials. In addition, in order to partially limit the growth of domestic prices for metal products, at the end of June, the Cabinet of Ministers announced the introduction of export duties on the export of more than 340 types of metal products for the period from August 1 to December 31, 2021. The new fee extended to rolled products, fittings, blanks, wire, and ingots. It consists of a base rate of 15% and a specific,