Deflationary trend in August: Tatarstan on the threshold of a new economic reality?
What has caused the decline in consumer prices over the month against the backdrop of still high annual inflation
September 2025 brought historic data for economists in Tatarstan. According to the report by Rosstat, in August consumer prices in the republic showed negative dynamics in monthly terms — for the first time since October 2022. Prices fell by 0.61% compared to July, creating a paradoxical situation against the backdrop of still high annual inflation at 8.41%. This phenomenon deserves detailed analysis, as it may signal important structural changes in the regional economy, believes digital economist Ravil Akhtyamov. A detailed breakdown can be found in his opinion column, written for Realnoe Vremya based on materials from the Bank of Russia’s National Bank Branch for the Republic of Tatarstan.
Cost of living in Tatarstan has risen by more than 8%
To grasp the true significance of what is happening, it is necessary to distinguish between short-term and long-term trends. The monthly decline in prices is a tactical success achieved through a set of monetary policy measures and seasonal factors. However, in retrospect the picture looks more complex: over the past 12 months the cost of living in Tatarstan has risen by more than 8%, which significantly exceeds the Bank of Russia’s target.
The main driver of cooling consumer inflation is the consistent tightening of monetary policy. High key rates, maintained over the past quarters, have radically changed the behavioural patterns of economic agents. The population has shifted from consumption to saving, while businesses have become more selective in investment projects. This “saving on growth” has created conditions for price competition, especially in the durable goods sector.
Food price decline — a seasonal factor
Special attention should be paid to the sectoral structure of price changes. The largest monthly decline was recorded in food products (-1.00%), which is largely explained by the seasonal factor — the arrival on the market of new harvest output from the local agro-industrial complex. However, in annual terms this very category continues to show the highest price growth, reflecting persistent structural inflation risks in the food industry.
The services sector, traditionally more inert, also showed unusual downward dynamics in August (-0.77% m/m). This trend is particularly significant, since in recent years services have been the main driver of inflation due to the high share of wages and the administrative regulation of tariffs. Annual inflation in the services sector remains at 12.54%, indicating the need for further structural reforms in this area.
Annual inflation in Tatarstan is higher than the national average
The regional aspect of inflationary processes deserves separate analysis. Tatarstan demonstrates a unique dynamic: with a deeper monthly decline in prices (-0.61% compared to -0.40% on average across Russia), annual inflation in the republic remains above the national figure (8.41% versus 8.14%). This paradox can be explained by the structural features of the region’s economy — the high share of industrial production and the developed agro-industrial complex, which respond more quickly to changes in monetary policy but retain cost inertia.
An important indicator of future price dynamics is core inflation (excluding short-term fluctuations in fruit and vegetable prices and energy carriers). In August this indicator fell to -0.15% in monthly terms, which may signal a more fundamental cooling of inflationary processes. However, annual core inflation remains at 8.72%, pointing to the persistence of underlying inflationary risks.
Deflation opens a new chapter in Tatarstan’s economic history
The prospects for further price dynamics depend on a combination of factors. On the one hand, cost pressure from producers persists — especially in manufacturing and the services sector. On the other hand, the cooling of domestic demand creates a natural barrier to price growth. The key factor remains the policy of the Bank of Russia, which will maintain a tight monetary stance until a sustainable return to the 4% target is achieved.
For Tatarstan’s economy, August deflation may become a signal for structural transformation. Regional enterprises will have to adapt to a new reality, where price competition is intensifying and the consumer is becoming more selective. This will require investment in efficiency, digitalisation, and cost reduction.
In the medium term, further slowing of inflation can be expected; however, the risks of maintaining high annual inflation remain significant. Particular concern arises from inflation in the services sector, where prices exhibit high inertia. Stabilising this segment will require not only monetary measures but also regulatory changes at the regional level.
August inflation data in Tatarstan open a new chapter in the region’s economic history. They demonstrate that the combination of tight monetary policy and structural transformations can yield tangible results even in challenging economic conditions. However, it is premature to declare victory over inflation — rather, we are witnessing a transition to a new phase of the economic cycle, where managing inflationary expectations will become a key challenge for policymakers and businesses.