Factors underlying inflation in Russia 2000–2015

Abstract

This paper examines the problem of continuing inflation in Russia in the period from 2000 to 2015. Although factors causing high inflation changed during this period, such factors as money supply, wages, gas and electricity prices, and ruble exchange rate have been essential factors when analyzing inflation in Russia. This paper focuses on gas and electricity prices that represent state-regulated prices in natural monopoly sectors and that have been factors of price increases specific to Russia. They have been raised by the state in order to narrow the gap between their domestic and international prices. It is suggested that there was a turnaround in 2008 when the role of each inflation factor changed significantly. Concerning the rebound of inflation rate since 2014, the overwhelming influence of depreciation of the ruble is indicated. Institutional factors such as the monopolistic structure of the economy that have kept the inflation rate high in Russia are also suggested.