Friday 17th December 2021
Idiosyncratic method
Gummy bears are said to predict Russia’s inflation
In Russia, inflation has reached its highest level in five years. A financial market economist wants to use its own index to give an indication of how the price increase is developing – and is also relying on sweets from abroad.
High inflation is an issue in much of the world – including Russia. An economist at the state RANEPA University has now developed an idiosyncratic and simple method of predicting developments. An important ingredient: gummy bears.
As reported by “Bloomberg”, the shopping cart chosen by Alexander Abramov consists of sweets and eleven other things that families buy – including bread, milk and chicken. He uses the prices of imported gummy bears to take the ruble exchange rate into account.
He collects his data by going to the supermarket. According to the Abramov Index, inflation was around 26 percent in November, while the official figure was 8.1 percent. This is the highest value since the beginning of 2016. It is more than twice as high as the central bank is aiming for.
Although Abramov’s method is completely unscientific, according to “Bloomberg” it is attracting some attention. “It is a good indication of the direction because it is so simple,” the finance portal quotes the former central banker Oleg Vyugin.
The central bank expects easing soon
Financial market expert Abramov claims to have developed his index as a school project for his daughter. But they quickly lost interest.
Meanwhile, central bank chief Elvira Nabiullina emphasized that the central bank was not planning to raise its inflation target from four percent. For the coming year it is realistic that the inflation rate will fall to 4.0 to 4.5 percent. In October, the central bank braced itself against the rapidly rising prices with an unexpectedly strong rate hike, thus catching many experts on the wrong foot.
But Abramov should not have been surprised. Because his inflation index had already shot up in September.