Decline in Prices: Rosstat Reports the Initial Week of Deflation in 2025
In a surprising turn of events, Russia has witnessed a brief period of deflation in food prices, particularly in fruits and vegetables, towards the end of July 2025. This marks the second instance of weekly deflation since the beginning of September 2024.
The main factor causing this deflation is a sharper seasonal decline in the prices of fruits and vegetables. Over the week from July 15 to July 21, 2025, prices dropped by about 3.48%. This seasonal effect is common as harvest periods increase supply, thus lowering prices.
Additional contextual factors contributing to this deflation include:
- Moderation of overall annual inflation in Russia, with the inflation rate easing to around 9.2% year-on-year by July 2025, down from 9.4% in June. This general slowing inflation environment helps contain price rises in food and other categories.
- Monetary policy easing by the Russian Central Bank, which cut its key interest rate by 200 basis points to 18% in late July 2025, responding to declining inflationary pressures and subdued domestic demand growth. This rate cut reflects confidence in slowing inflation, including in the food sector.
The deflation observed was notably seasonal and weekly, with prices for fruits and vegetables dropping faster than other goods and services.
Among the fruits and vegetables experiencing a decrease in prices, cucumbers saw a drop of 6.8%, while white cabbage and beets became cheaper by 8.3% and 9.2% respectively. Potatoes also decreased by 7.3%.
However, it's important to note that prices for some medications have seen a slight increase. Levomekol, activated charcoal, valerian, and analgin have all risen by 0.2% to 0.7%.
In summary, the seasonal abundance of fruits and vegetables leading to increased supply and lower prices is the immediate cause of deflation in these items, within a broader context of easing inflation and accommodative monetary policy in Russia in 2025.
The seasonal abundance of fruits and vegetables, resulting from a sharper seasonal decline in their prices, is the immediate cause of the observed deflation. This decrease in prices is facilitated by the overall moderation of annual inflation in Russia, with the inflation rate easing to around 9.2% year-on-year by July 2025, and the monetary policy easing by the Russian Central Bank, which cut its key interest rate by 200 basis points to 18% in late July 2025.
