How prices have changed in Russia over 10 years

by | Apr 21, 2021

The flash mob # 10yearchallenge is a good opportunity to talk about what has changed and how in 10 years. Do you know, for example, how much iodine or a laptop has risen in price during this period?

At first I had the idea to look at what is closer to the body, as they say, at the prices in the car market. But then I decided to look at other prices. The results of the work are in two tables below. So, let’s see: what was and what became.

Inflation and exchange rates

First of all, about inflation. For 10 years, inflation amounted to 93.5%. And that’s why it’s important to know. So, everything has risen in price over the years by 93.5%. Some goods and services have risen in price less, which means that they have the right to rise in price further. And if something has risen in price a lot, then the greed of the manufacturer has revealed itself in it. But this is, as they say, “according to the classics”, that is, without taking into account a couple of hundred other parameters.

I also looked at the dynamics of exchange rates over 10 years to show the boundaries of potential price changes for imported goods. 2009 to 2019 the dollar against the ruble rose by 136% (from 29 to 69 rubles), and the euro rate increased by 92% and amounted to 79 rubles instead of the previous 41 rubles. So, here are the boundaries for the conditional division into “more”, “less” or “equal”: everything that has risen in price by less than 92%, has become less profitable, everything that lies in the range from 92 to 136% (especially for imported goods and dependent on them), we believe, remained at the same level, and the third group, which has risen in price by over 136%, began to bring more profit.

Cars have risen in price below inflation

01. GiPA

First, about what is close. The top-of-the-range budget car now costs 52% more than it did in 2009. Have the configurations changed? Have the production conditions changed? I do not consider all these nuances yet, but one thing is for sure, cars have risen in price significantly below inflation. The cost of servicing a car in the Russian Federation increased by an average of 28%. The prices for premium tires of the most running dimension went up by the same amount, and a set of pads went up by 37%. That is, the cost of car maintenance also falls short of inflation. But engine oil is already much closer to the target, as a liter of oil has risen in price by an average of 72% over the reporting period. It is necessary to say separately about the cost of gasoline: the rise in prices for AI-95 even slightly outstripped the inflation rate and amounted to 96%.

Buckwheat and vodka break records

02. Summary

Now let’s look at the second table, which contains goods and services aimed at mass consumers. In general, prices have changed from 1% to almost 300%. And this is only among some of the products. The least change was the cost per square meter of secondary housing in Moscow: over 10 years, it grew by only 1%. A trip on the metro with the Troika card costs 38 rubles, which is 75% more expensive than the price in 2009. That is, in principle, travel in the metro can still rise in price. If we take an important grocery product, sugar, then it has risen in price by 57%, and it also has the right to rise in price in the future. But the extremely important indicators of the Russian economy – buckwheat and vodka – over 10 years have risen in price by 188% (per 1 kilogram) by 282% (per liter), respectively. This means that the currency of villages and the Russian hinterland has become almost 3 times more expensive! And this is not a trip to Europe, which increased in price by 92% due to the growth of the euro! This actually means that the cost of services has become 3 times more expensive for the villagers! Whether it is connected or not, but delivery of a regular letter by mail has become more expensive, though only 2 times (+ 193%).

And of course, technological progress has not stopped over these 10 years: the storage capacity of the iPhone has grown from 2009 to 2019. by 1500%.

A very simple comparison of prices for various goods with accumulated inflation clearly shows the difference. Something rises in price by 1 percent, and something – by 300 percent. And there are many reasons for this. For some goods under the guise of a crisis, you can raise prices higher and return the profitability of the enterprise, in the case of other goods, the dependence on imports is so great that an increase in the cost only for inflation will lead to bankruptcy of the enterprise. And someone had already had such a margin of profit that inflation could not have been noticed. I would like to end with the well-known anecdote about statistics, “The poor eat cabbage, the rich eat meat, but on average everyone eats cabbage rolls” – this is a good illustration of the average inflation rate.

About the Author

Alexander Gruzdev is an extraordinarily experienced consultant in business analytics. Since he was 14, Mr. Gruzdev was working in the market research industry and started several businesses including gambling organizations, retail shops, and real estate.

Since his first entrepreneurial endeavors began, he never quit market research – in fact, during the last 15 years Mr. Gruzdev held the positions of general manager and shareholder in this segment. His experience in global market intelligence spans over 20 countries including Europe, Russia, Asia, and the MENA region, for more than 100 different customers.

Thanks to everyone reading my blog! I invite you to subscribe to its updates so you can receive new posts and notes in a timely manner to your mail.