Price-setting Behavior in Russia: Study of Survey Evidence

Understanding the pricing behavior of firms at micro-level is the crucial aspect of effective monetary policy. This study implements the approach of direct survey of top management of firms about key pricing practices conducted by the Center for Sociological Research of the Institute of Social Sciences of the Russian Presidential Academy of National Economy and Public Administration in 2020. According to the survey results, firms typically set prices independently, and the most common pricing principle is cost-plus pricing. A large proportion of respondents (47%) adhere to strict regularity in price revisions, which could contribute to the persistence of inflation at the macro level. The frequency of price revision of the median firm is monthly, while firms from trade and construction industry, large firms, as well as firms with more than 20 direct competitors revise prices more often than other firms. The main reason for setting new prices is changes of firms’ costs. The existence of contracts with customers plays an important role in explaining price rigidity. An asymmetry in the reaction of prices to shocks of different nature and direction is revealed, and the factors of this asymmetry are considered.