Regional Differentiation of Inflation in Russia under the Conditions of Economic Structural Reconstruction

Abstract

The article examines the dynamics of inflation processes in Russian regions in the period 2021–2025 under the conditions of economic restructuring, sanctions restrictions, and the tight monetary policy of the Bank of Russia. Based on the analysis of consumer price dynamics, it is shown that after 2021, a stable negative relationship has formed between the level of per capita monetary income and inflation: prices grow faster in low-income regions, which exacerbates socio-economic inequality. It has been determined that the main factors shaping interregional differences in consumer prices are the outstripping rates of growth in prices for food products and services. Based on statistical data for 85 constituent entities of the Russian Federation and using econometric panel data models, the factors of interregional differentiation in consumer price growth rates are estimated. It is shown that external shocks distort the effect of the transmission mechanism of monetary policy; in 2022–2024, the increase in the key rate did not lead to a decrease in inflation, but had a negative impact on economic dynamics. The key factor determining regional inflation rates is the Central Bank’s key rate, whose impact has a delayed effect and manifests itself with a one-year lag. Statistically significant factors for all regions include: the dynamics of real incomes, poverty levels, the share of social spending in regional budgets, and the growth of lending to individuals and small and medium-sized businesses. For regions with incomes below the Russian average, significant factors differentiating inflation rates include the dynamics of real incomes and poverty levels