The idea originates from the RTS, which was tasked by Deputy Prime Minister Alexander Novak in September to explore this option. The composite index will take into account the dynamics of minimum and average salaries, industry tax and credit burdens, increases in housing and utility tariffs, transport costs, and the rising expenses associated with updating fixed assets (modernisation, repairs, staff rotations, etc.). A retrospective calculation of the composite index for 2025 has produced a figure of 14%. According to Rosstat, consumer inflation reached 5.08% as of November 17. Average petrol prices have risen by 11.8% since the beginning of the year, which aligns with the composite index but significantly exceeds the level of consumer inflation.
A calculation for 2026 has also been conducted, with the composite index estimated at 5.7%, while the forecast for consumer inflation is projected to be 4%.
What does this mean for consumers? For this year – nothing. Prices at fuel stations have already outstripped inflation, and even if they experience a slight decrease in the remaining time, it is unlikely they will return within its limits. However, next year, should the proposal be approved, retail prices for petrol and diesel fuel (DT) would gain the right to increase almost 1.5 times more than if constrained to consumer inflation levels. For example, if petrol A-92 in Moscow costs 62 roubles per litre in December, its price could easily rise to 65.5 roubles under the limitations of the composite index, compared to 64.5 roubles if bound by consumer inflation.
It is noteworthy that these indices are merely benchmarks. Legally binding limits on the growth of retail fuel prices have not been established, and as long as a market exists, they cannot be. Nevertheless, exceeding maximum values will trigger inspections of fuel stations and create tension among consumers and the industry alike. Over the past five years, the growth of retail fuel prices only fell below (even slightly) consumer inflation in the years 2020 and 2022. This year, it is likely to exceed inflation as well. This indicates that an incorrect setup was initially chosen, necessitating a change.
The timing for discussing changes in the fuel market settings appears deliberate. Presently, there is a lull in the market, fuel prices on the exchange have dropped, and retail prices have levelled off or even decreased slightly in some regions. Diesel fuel prices, on the other hand, are rising, albeit predominantly due to seasonal factors – the shift from summer to winter diesel, which this year has been prolonged in Central Russia. With tensions easing, the next price surge is expected to commence in spring 2026. There is ample time to resolve all discrepancies and reach a consensus.
Concerns have arisen regarding the parameters used for calculating the composite inflation index. The most significant weight (coefficient of 0.4) is attributed to "the increase in average salaries (according to Rosstat) and the rise in the minimum wage (MW)". The tax burden increase is calculated at a coefficient of 0.25, with a 0.02 coefficient for increased credit burdens, and 0.13 for housing and utility tariffs, while transport tariffs and production needs are both set at 0.1. These parameters and coefficients are outlined in the document sourced from a letter by the RTS.
Over the past five years, retail fuel price growth has only stayed below inflation in 2020 and 2022.In effect, this suggests that salary changes will primarily influence the potential rise in retail fuel prices. The higher the wage, the more expensive petrol could become. This situation bears resemblance to a scene from an old Soviet film "Look for the Woman", where an employer raises an employee's salary while simultaneously increasing her rent, given that the building belongs to him.
As noted by Yuri Stankevich, Deputy Chairman of the State Duma Energy Committee, the criteria proposed by the RTS, such as wage dynamics, require robust justification. Otherwise, there is a risk of creating a precedent for other sectors, potentially further inflating the economy overall.
However, he believes that the RTS proposals warrant extensive discussion, as they expose sensitive issues related to fuel price formation in the oil products market. According to calculations presented by both the RTS and the Ministry of Energy, the application of the composite index would not lead to a significant increase in retail prices but would enable a more comprehensive consideration of costs incurred by companies operating fuel stations.
The document from the Ministry of Energy states that current retail prices do not provide sufficient margin for fuel sales at fuel stations. The RTS estimates that the average retail gross margin for purchasing fuel in small wholesale as of November this year stood at minus 6.3 roubles per litre, when factoring in costs.
According to Sergey Tereshkin, CEO of the OPEN OIL MARKET fuel marketplace, the "inflation minus" formula is a familiar one for the industry, yet its actualisation is becoming increasingly challenging amid the divergence between fuel prices and other costs. Next year, this discrepancy could widen further, given the cooling of inflation. The index proposed by regulators sets new normative boundaries. Alongside this, a moratorium on the cancellation of the damping mechanism (a subsidy to oil producers from the budget for supplying fuel to the domestic market) will remain in effect until May next year. This, in turn, introduces risks of rising exchange prices, despite their current stabilisation. As traders and the largest independent fuel station networks procure petrol from the exchange, any increase in exchange prices will be reflected at retail. Thus, the regulators’ desire to establish a new benchmark is understandable. However, it is crucial to remember that changing the thermometer does not alter the weather outside.
The Ministry of Energy assesses that retail fuel sales at fuel stations are currently operating at an average loss.In the opinion of Sergey Frolov, Managing Partner at NEFT Research, the ideas from the Ministry of Energy and the RTS are sound, albeit belated (the decoupling of fuel station prices from average inflation should have been pursued a couple of years ago). The current situation is absurd: market prices reflect the balance of supply and demand and respond to news triggers, while fuel station prices are effectively controlled manually through the FAS to remain within inflation limits. This is doubly absurd this year in light of the sharp increase in fuel excise taxes at the year's onset. Prices should have risen above inflation by 2.0-2.5 roubles due to the tax increase. As a result, since early summer this year, the trading of petrol often has a negative margin. Furthermore, the profitability figures for core business at fuel stations this year are so dismal that it is not only independent stations struggling (where a stable trend of decreasing operating stations has been observed), but also stations belonging to major oil firms. Of course, the Ministry of Energy’s proposal will, in practice, push prices at fuel stations upwards, but it would be far worse if the trend of decreasing fuel stations and supply continues, asserts Frolov.
As Dmitry Gusev, Deputy Chairman of the Supervisory Board of the "Reliable Partner" Association and a member of the expert council for the "Fuel Stations of Russia" competition, points out, the proposed measures are yet another attempt to fine-tune the system manually. While we lack an adequate fuel strategy and the required number of fuel stations for the country remains undetermined, this situation will persist.
In Stankevich's view, if the retail sector raises the issue of improving profitability, it would be reasonable to consider support options for specific groups of citizens based on their financial circumstances, or other significant conditions that determine eligibility for discounts on fuel purchases. Especially since such examples of targeted support are already visible in sectors like housing and utilities, electricity, transportation, and other services.
Source: RG.RU
