Igor Shestakov comments to Kommersant on how petrol price growth affects regional economy
9 June 2018
Igor Shestakov, FinExpertiza Expert
— For the first 5 months of 2018, the average price for fuel went up by 10% compared to the end of 2017. Since the issue is being discussed at the level of the Government, a slowdown in price growth rates can be expected. It should be noted that the major problem is the reduction of export duties for oil and increase in severance taxes. As a result, fuel prices will be getting equal to the European prices as the export duty will be reduced.
The consequences for regions and for the economy as a whole are obvious: higher price growth and inflation rates. In regions, the economy will survive the increase in prices, if the inflation rate could be reduced. The response will be higher prices, primarily for agricultural products. Also, the cost of passenger airline and motor traffic will increase, this issue will have to be dealt with through higher travel costs or higher subsidies to transport companies.
As for other industries of economy, fuel does not constitute a great part in the cost of products or services, so the price increase will not be significant.