Russian inflation is raging at 60%, not the reported 3.6%, thanks to the ruble's 'freefall', top economist Steve Hanke says

[toomuchtime_]

Russia could be grappling with an unreported inflation crisis as its war with Ukraine rages on, if the estimates of top economist Steve Hanke are any guide.

Based on his own calculations, Hanke gauged the Russia's annual rate of consumer-price increases at an eye-watering 60%, far above the 3.6% level most recently reported by the Bank of Russia.

"According to the Central Bank of the Russian Federation, Russian inflation expectations jumped to 11.1% in July. Today I measure inflation at 60%/yr, ~5.5x the central bank's data point. The expectations appear to be way too optimistic," the economist said in a tweet.

"The ruble's FREE-FALL is fueling RAGING INFLATION in Russia," the applied economics professor at Johns Hopkins University said in an earlier tweet.

A weakening currency tends to stoke inflationary pressures because it drives up the costs of imported goods.

Just last week, Russia's central bank raised benchmark interest rates by a whopping 100 basis points to 8.5% in a bid to rein in consumer-price pressures.

"Inflation expectations have risen. Domestic demand trends and the depreciation of the ruble since the beginning of 2023 significantly amplify pro-inflationary risks," the Bank of Russia said.

MSN

No one believed the economic reports during the soviet era, but it didn't matter much because hardly anyone did business with the USSR, but after 1991 when Russia's economy became heavily dependent of trade with the West and investment from the West, the reports became more credible, but now that Russia is effectively cut off from the civilized world, Russian economic reports, indeed all Russian news, are works of fiction again.

 

[odanny]

The Emperor has no clothes, and no one dare tell him.

 

[Silver Cat]

The Emperor has no clothes, and no one dare tell him.

Sure. As well as Burger King doesn't dare to increase their prices, too.

 

[luiza]

Resident Troll Toomuchbooze not understanding inflation in a country that is 100% self sufficient . Russia is the only major power that can regulate imports at a switch because it has alternatives/ substitutions etc . But any residual inflation is more than cancelled by increased competitiveness in export markets ( new entries) or where it can raise prices almost at will because of world market scarcity . Find a simpler Topic Boozer. Poor old man is still using MSN for his Fake News , rofl .

 

[Silver Cat]

According the World Bank report, GDP by PPP in 2022:

 

[Bleipriester]

Russia could be grappling with an unreported inflation crisis as its war with Ukraine rages on, if the estimates of top economist Steve Hanke are any guide.

Based on his own calculations, Hanke gauged the Russia's annual rate of consumer-price increases at an eye-watering 60%, far above the 3.6% level most recently reported by the Bank of Russia.

"According to the Central Bank of the Russian Federation, Russian inflation expectations jumped to 11.1% in July. Today I measure inflation at 60%/yr, ~5.5x the central bank's data point. The expectations appear to be way too optimistic," the economist said in a tweet.

"The ruble's FREE-FALL is fueling RAGING INFLATION in Russia," the applied economics professor at Johns Hopkins University said in an earlier tweet.

A weakening currency tends to stoke inflationary pressures because it drives up the costs of imported goods.

Just last week, Russia's central bank raised benchmark interest rates by a whopping 100 basis points to 8.5% in a bid to rein in consumer-price pressures.

"Inflation expectations have risen. Domestic demand trends and the depreciation of the ruble since the beginning of 2023 significantly amplify pro-inflationary risks," the Bank of Russia said.

MSN

No one believed the economic reports during the soviet era, but it didn't matter much because hardly anyone did business with the USSR, but after 1991 when Russia's economy became heavily dependent of trade with the West and investment from the West, the reports became more credible, but now that Russia is effectively cut off from the civilized world, Russian economic reports, indeed all Russian news, are works of fiction again.

Rethink your title: Inflation because of inflation.

 

[toomuchtime_]

Rethink your title: Inflation because of inflation.

That's not what it says. It says Russian economic reports are now, just as they were in the Soviet days, works of fiction.

 

[Bleipriester]

That's not what it says. It says Russian economic reports are now, just as they were in the Soviet days, works of fiction.

It says there is inflation due to ruble´s free fall, which is inflation. It means your expert suffers a free fall after running out of crack.

 

[toomuchtime_]

It says there is inflation due to ruble´s free fall, which is inflation. It means your expert suffers a free fall after running out of crack.

No, the fall of the ruble is not inflation. The prices of domestically produced items remains the same regardless of the value of the ruble compared to other currencies, but it means imported items will cost more and that will raise the cost of living which is inflation.

 

[Bleipriester]

No, the fall of the ruble is not inflation. The prices of domestically produced items remains the same regardless of the value of the ruble compared to other currencies, but it means imported items will cost more and that will raise the cost of living which is inflation.

No.

 

[Silver Cat]

No, the fall of the ruble is not inflation. The prices of domestically produced items remains the same regardless of the value of the ruble compared to other currencies, but it means imported items will cost more and that will raise the cost of living which is inflation.

Or that "imported items" are changed by domestically-produced, or by the same items, imported from more friendly countries, like China. A type of protectionism, you know.

 

[toomuchtime_]

Or that "imported items" are changed by domestically-produced, or by the same items, imported from more friendly countries, like China. A type of protectionism, you know.

What you are touting is a kind of ignorance. If China would accept payment in rubles at all, the price of Chinese goods would go up and the exchange rate of the ruble falls.

 

[Silver Cat]

What you are touting is a kind of ignorance. If China would accept payment in rubles at all, the price of Chinese goods would go up and the exchange rate of the ruble falls.

It depends. Russia sells larger amount cheaper fuel to China, Chinese cars becomes cheaper, also they give discount on the new Russian market and instead of paying, say, 2 million rubles for a European car, a Russian buyer prefer to buy more or less similar Chinese car for 1,5 million. Its win-win for the Russians and Chinese.

 

[toomuchtime_]

It depends. Russia sells larger amount cheaper fuel to China, Chinese cars becomes cheaper, also they give discount on the new Russian market and instead of paying, say, 2 million rubles for a European car, a Russian buyer prefer to buy more or less similar Chinese car for 1,5 million. Its win-win for the Russians and Chinese.

That may be your fantasy about how it works, but Russia is paying according to the exchange rate between the ruble and the yuan, and everything Russia imports cost much more because of the weak ruble. Stop trying to be clever; it only makes you look foolish.

 

[Silver Cat]

That may be your fantasy about how it works, but Russia is paying according to the exchange rate between the ruble and the yuan, and everything Russia imports cost much more because of the weak ruble. Stop trying to be clever; it only makes you look foolish.

It may be right when you a talking about tiny states, who's influence on markets is insignificant and who are a part of the free global market. When we are talking about the great players (like Russia) and not that free markets - the situation becomes much more nuanced.

 

[toomuchtime_]

It may be right when you a talking about tiny states, who's influence on markets is insignificant and who are a part of the free global market. When we are talking about the great players (like Russia) and not that free markets - the situation becomes much more nuanced.

lol Still more bullshit from you. There doesn't seem to be a single subject you know anything about. If Russia buys something from a Chinese company, it first has to convert its rubles into Yuan at the current exchange rate and then pay for the purchase in yuan; otherwise Chinese companies would go bankrupt doing business with Russia.

 

[Silver Cat]

lol Still more bullshit from you. There doesn't seem to be a single subject you know anything about. If Russia buys something from a Chinese company, it first has to convert its rubles into Yuan at the current exchange rate and then pay for the purchase in yuan; otherwise Chinese companies would go bankrupt doing business with Russia.

But before selling something to Russia, Chinese company have to produce it. And to produce it, they need to buy resources, for example, coal, gas, oil, steel, etc. If they buy it in Russia, then, it's yuan's price became lower for them with the lower exchange rate. Therefore, their production became cheaper in yuans. So, as they exchanged one barrel of oil to one smartphone - they may continue to exchange it that way. And as market there isn't absolutely free, then, optimisation of logistic and legal regulations may (under some circumstances) even decrease the prices for the final customer. Sometimes the schemes may be much more complicated, when, say, Rosneft deliver "Russian" crude oil on it's own Nayara Energy (which belongs mostly to Rosneft) refineries, where produce "Indian" fuel, which sells for much more higher prices in India, Europe and whole world for dollars and rupees. Then, as they have trading disbalace between Russia and India for more than 1 billion dollars/month and they have all those dollars and rupees , they buy, say, more of local refineries, or Indian T-90 Bhishma tanks, or medi-kits or undersanction electronic components, or whatever else they need, declare it as "humanitarian aid" or a "gift for a friend", or other non-commercial cargo and deliver it to the Russian customers. And then they say to Putin: "Sir, this month we have delivered to our Army one million medi-kits, 100 tanks (with the best French electronic) , 10000 night vision googles and 1000 cars. Next month we'll deliver even more. Please, don't demand extra taxes."

 

[toomuchtime_]

But before selling something to Russia, Chinese company have to produce it. And to produce it, they need to buy resources, for example, coal, gas, oil, steel, etc. If they buy it in Russia, then, it's yuan's price became lower for them with the lower exchange rate. Therefore, their production became cheaper in yuans. So, as they exchanged one barrel of oil to one smartphone - they may continue to exchange it that way. And as market there isn't absolutely free, then, optimisation of logistic and legal regulations may (under some circumstances) even decrease the prices for the final customer. Sometimes the schemes may be much more complicated, when, say, Rosneft deliver "Russian" crude oil on it's own Nayara Energy (which belongs mostly to Rosneft) refineries, where produce "Indian" fuel, which sells for much more higher prices in India, Europe and whole world for dollars and rupees. Then, as they have trading disbalace between Russia and India for more than 1 billion dollars/month and they have all those dollars and rupees , they buy, say, more of local refineries, or Indian T-90 Bhishma tanks, or medi-kits or undersanction electronic components, or whatever else they need, declare it as "humanitarian aid" or a "gift for a friend", or other non-commercial cargo and deliver it to the Russian customers. And then they say to Putin: "Sir, this month we have delivered to our Army one million medi-kits, 100 tanks (with the best French electronic) , 10000 night vision googles and 1000 cars. Next month we'll deliver even more. Please, don't demand extra taxes."

Again, nothing but bullshit from you. China is doing business with Russia for the benefit of China, not for the benefit of Russia. Just as China demanded and got a 30% discount on Russian oil, China will milk the falling ruble for all it can. Because of the falling ruble, when China buys raw materials from Russia, it gets then very cheaply, because of the low exchange rate the ruble has with the yuan, but when Russia buys a smartphone from China, it will pay through the nose because of the low exchange rate the ruble has with the Yuan.
Just as Russia exploited Iran's inability to sell its oil, now China is exploiting Russia's inability to sell much oil to anyone but China and India. Russia stands all alone while its "allies" strip it of all they can.

 

[Silver Cat]

Again, nothing but bullshit from you. China is doing business with Russia for the benefit of China, not for the benefit of Russia.

They are working together for the mutual benefit. Russia is Chinese 'milking cow', and China is Russia's 'milking cow'. And the most important difference between a villain (like Putin), peddler (like Xi) and fool (like Biden) is that both villain and peddler wouldn't try to kill a 'milking cow' or a goose which lays us golden eggs without a really good reason.

Just as China demanded and got a 30% discount on Russian oil, China will milk the falling ruble for all it can. Because of the falling ruble, when China buys raw materials from Russia, it gets then very cheaply, because of the low exchange rate the ruble has with the yuan, but when Russia buys a smartphone from China, it will pay through the nose because of the low exchange rate the ruble has with the Yuan.

Actually, smartphone prices are bit lower in Russia, but it's not really important.

What is important - what is the price of the US-manufactured smartphones? And the answer is simple - the USA can't manufacture smartphones anymore. Why? Yes, because China have access to cheaper resources and to the global markets.

Just as Russia exploited Iran's inability to sell its oil, now China is exploiting Russia's inability to sell much oil to anyone but China and India. Russia stands all alone while its "allies" strip it of all they can.

Really? If so, why after the year and half of the war of attrition, the country with 1,5% of the global economy still have overwhelming superiority in weapon and ordnance production over the alliance with 55% of the global economy?

 

[toomuchtime_]

They are working together for the mutual benefit. Russia is Chinese 'milking cow', and China is Russia's 'milking cow'. And the most important difference between a villain (like Putin), peddler (like Xi) and fool (like Biden) is that both villain and peddler wouldn't try to kill a 'milking cow' or a goose which lays us golden eggs without a really good reason.




Actually, smartphone prices are bit lower in Russia, but it's not really important.
View attachment 809129

What is important - what is the price of the US-manufactured smartphones? And the answer is simple - the USA can't manufacture smartphones anymore. Why? Yes, because China have access to cheaper resources and to the global markets.




Really? If so, why after the year and half of the war of attrition, the country with 1,5% of the global economy still have overwhelming superiority in weapon and ordnance production over the alliance with 55% of the global economy?

All of this is irrelevant shit. Chinese companies that do business with Russia are out to maximize profits just like other companies and they don't care about Russia's problems. Russia is entirely on its own and not doing well.