Gummy Bears Give Russia Economist Inside Track on Inflation
Russian inflation has consistently defied forecasts this year -- including from the central bank -- that it will begin to slow. But economist Alexander Abramov says he’s found a telltale predictor: gummy bears.
His Facebook reports on the “Abramov Index” -- an unscientific home-grown compilation of prices for the sticky candies and 11 other regular family purchases -- show inflation hit a new high of 26.1% in November, far above the official figure of 8.4%.
Though lacking in statistical rigor, Abramov’s numbers have attracted something of a following among specialists seeking to figure out where price growth, now at a six-year high, is headed.
“It’s a good hint at what is going on because of its simplicity,” said Oleg Vyugin, a former top central bank official who’s a regular reader. “It reflects the real situation better than after the averaging out and smoothing out by the authorities.”
It helps that Abramov releases his reports just days before the official data come out.
“September, October, November were sharp, sustained increases,” he said. “There’s no downward trend yet.”
Abramov, a specialist on financial markets at RANEPA, a state-run university in Moscow, concedes his index isn’t scientific. Started in 2015 as a school project with his daughter (who quickly lost interest, he said), his indicator showed inflation beginning to pick up last year as soon as the central bank began cutting interest rates.
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His basket includes imported gummy bears to capture the effect of the exchange rate, as well as staples like bread, milk, and chicken. He gathers the data on visits to his local supermarkets and doesn’t adjust it for seasonality or other factors.
“It bounces between expectations and the official data. It’s very volatile,” he said.
Central bank data show that Russians remain highly skeptical of official inflation figures, reporting the rate as they perceive it as twice the official number. That helps keep expectations of future price gains far above those expected by most professional economists.
“Everyone has his own inflation,” said Anton Tabakh, chief economist at Moscow-based credit assessor Expert RA, who knows Abramov personally. “This is the inflation of an esteemed professor.”
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