Thread by @Prune602

I want to give you a few things to keep in mind when interpreting Russian price data. Especially as we move into the end of the year.

Sone of these will be obvious…once they’re pointed out to you…some not so much.

https://twitter.com/prune602/status/1841848807463559427

We’ll start with the elephant in the room. Russia’s “official” inflation statistics are manipulated.

Remember the car manufacturer that was hiding losses on the City of Moscow’s budget? This is what I describe as Russia “wagging the dog” or “creative accounting”

This means that Russia will take efforts make the price the items they’re using to track inflation low by moving some of those costs to places that AREN’T being tracked.

The other thing they will do is pressure people to keep their prices unreasonably low.

1. They do this via export policies such as either banning export completely OR export quotas. Both are intended to flood the domestic market so the price plummets.

2. They also do this by pressuring companies to keep their prices unreasonably low. They often send out the Federal Antimonopoly Service (FAS) to do this.

*sigh* I want to make something clear here, because people often will try to make false equivalencies or want things to be simple binary decisions:

This is always good/This is always bad

This makes it difficult to interpret what Russia is doing. Abandon that.

Instead…

What I want you to envision when you look at the Russian economy is an ecosystem.

For example: Where I live, the deer population can get out of control, particularly because there are no natural predators (or not enough). It is hunt HERE in order to balance the ecosystem.

So hunting HERE is good…to a certain point. Which is why there are ALSO limits on HOW MUCH you can hunt. You’re trying to keep things in balance.

In the economic sense, Russia doesn’t really have this balance. They are taking tools that can be helpful at certain points to restore balance to a system and either:

- Over using them
- Flat out lying about what they’re doing

And the reason is that ultimately, the Russian Government is an unrestrained predator on the Russian Economy.

So, for example: Combating price gouging can good and even necessary.

But saying you’re doing that when you’re not is bad.

Here is a good example of the FAS pressure companies to keep their prices artificially low, when they have every reason to increase.

If your costs are going up, your prices have to go up too. Otherwise, you go bankrupt.

https://twitter.com/prune602/status/1767284867119689751

And clearly prices HAVE been going up, but the FAS has even pressured companies that forecasted price increases.

See, they are the governments goons. There may be times that they actually do stop price gouging, but there are a lot of reports like this 👇

https://twitter.com/prune602/status/1793140060654829960

So let’s put all the actual price manipulation aside (but remember that it is always happening) and talk about the more CURRENT things to watch for as we head towards the end of the year.

🤗 Misleading Statistics

When you see these reports a lot of the time, they come from Rosstat which is the Federal State Statistics Service.

And they’re usually giving information about items they are tracking as part of the “Consumer Basket”

These are the things used to calculate “official” inflation

And these are very basic things like tomatoes, eggs, cucumbers. For each of these items it’s important to pay attention to HOW the data is being reported.

For example, trying to emphasize that the price of eggs decreased since the beginning of the year during summer.

Well, eggs are seasonal. Egg prices are (almost) always higher in January than they are in June.

Thus if you were to look at prices on products that have seasonality from the same time LAST YEAR instead, you might get a better idea of how things are doing.

But also, these things are reported in percentages and they get to start over in January.

But THIS fall, it’s important when they do this to remember that prices for a lot of items started skyrocketing at the end of last year.

They may take advantage of this to try to make it appear as if things are “improving” depending on how they present the data.

Like everything, you need to pay attention to what you’re looking at, and if you really want a better idea, go look at the Rosstat reports the articles are based on AND compare them to last year’s reports.

(If it’s not Rosstat, still try to see if you can do the same)

I started this thinking it would be a short thread…whoopsie!

Here is a good snapshot from the end of last year. Imagine how Russia could make egg prices look better by using comparisons to price increases from last year. (Or how bad it is if they can’t)

https://twitter.com/prune602/status/1740785527719391442

I decided to make a simplified example. Left is the physical prices of hypothetical widgets over 2 years.

In numbers in the red box is a variety of methods that could be used to tell you about the data, and they might not even be all that clear about which one they’re using.

If you are the government, you could send out a press release for lazy reports that highlights what you want them to highlight light, therefore painting the best picture possible

BAD: In July prices for widgets increased 69.9% (year on year)

GOOD: In July prices DECREASED 0.6% (month to month) for the second month in a row!

GREAT: In July prices DECREASED 6.5% (year to date)

Pick your narrative!

So just…be careful

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