Friday, January 30, 2015

Russians rush to stores to pre-empt price rises

Click here to read the article. One of the factors that can shift demand curves is expectation of future price. If, for some reason, you expect a fairly big price increase in the near future, your demand today will increase. That is, the demand curve will shift to the right.

It seems like this happened this past December in Russia. Here are excerpts from the article:
"Russian consumers flocked to stores Wednesday, frantically buying a range of big-ticket items as they looked to pre-empt price rises following the staggering fall in the value of the ruble over recent days.

As the government looked at ways of easing the selling pressure on the ruble, which has slid 15 percent in just two days and raised fears of a bank run, many Russians were buying cars and home appliances — in some cases in record numbers — before prices for these imported goods shoot higher.

Swedish furniture giant Ikea, for one, has already put consumers on notice that its prices will rise Thursday, which resulted in weekend-like crowds on a Wednesday afternoon.

Shops selling a broad range of items are reporting record sales while some have had to suspend operations, unsure how far down the ruble will go. Apple, for one, has halted all online sales in Russia."

"The ruble has suffered catastrophic losses this week as traders fretted over the impact of low oil prices on the Russian economy, as well as the impact of Western sanctions imposed over Russia’s involvement in Ukraine’s crisis."
 If the value of your country's currency falls, it makes imports more expensive.

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