Manufacturing product prices rise slowly
The rise in industrial prices is still primarily determined by the climbing prices for energy resources while in manufacturing price increase has been rather low. In August 2012, the manufacturing prices were just 0.6% higher than a year ago. As predicted earlier, the upward price expectations of manufacturers at the beginning of the year were not actually reflected in the price-lists.
A slower rise in manufacturing product prices for products sold domestically (0.3% year-on-year) was one of the factors behind the slow rise in consumer prices (the annual inflation in July and August stood at 1.7%, which is the lowest indicator since 2010). Lower inflation acted to increase the purchasing power of the average salary, with the salaries rising at the same pace. Thus the rise in retail turnover (real) has been rather convincing in recent months, with private consumption becoming the main GDP driver.
The slower rise in manufacturing prices for exports (0.9% year-on-year) was partially responsible for deteriorating trade conditions, with the value of an export unit growing slower than the value of an import unit. It should be noted that such export unit value changes were expected before.
Future price developments will continue to be substantially impacted by fluctuations in global oil and food prices. Over the last few days, global oil prices have been dropping yet again reaching the average of the last 12 months. Yet the oil price dynamics is very volatile being influenced by the most insignificant announcements about increasing or decreasing supply or deteriorating demand as a result of global economic problems. At the same time, Cereals Price Index is close to its historical high after going up substantially since June as a reaction to worries over a worse than expected harvest.