Get Ready for Other Price Shock

Everything can increase in price already in a few months.

"There are no grounds for price growth in Belarus," Lukashenka stated the other day when agreeing upon appointment of new leaders of local verticals.

How realistic is the next populist statement of the Belarusian ruler? Zautra Tvaye Krainy and candidate of economic sciences Leanid Zlotnikau deal with the issue.

- Do we really have no grounds for price increase?

- There is no market economy here, it is hard to talk about the price stability. Belarus controls them (this is not the market stability; it is not a standard economy) so all talks about the stability are conditional.

I recall one thing: by the end of the first half of the year the Federation of Trade Unions of Belarus (FTUB) tried to calculate the cost of essentials. The list included food and other necessary consumer goods. Compared with the first six months last yearand here's the result: the growth emounted to 24% against 6-7% of statistical ones. That is, our statistics do not take into account everything required.

The second is the way we pay for goods. Let's take food, it is being subsidized. That is, when buy food we do not pay for costs. It is not possible in the market economy. When we buy a jacket we also cover the VAT. It means that you pay 20% of the cost of goods. This money comes to the budget, and then to producers of agricultural products. Thus, costs of agricultural producers are not reflected, therefore they are lower than in the market economy.

Therefore, if right now there are no such conditions for a price shock, by the end of the year they will.

- Seasonal agricultural fairs have started, and prices for vegetables, fruits, roots and so on are sometimes much lower than in stores. Why is then the price control in trading enterprises needed?

- These fairs are the part of the control over prices. Agricultural enterprises are ordered to sell goods at prices close to the cost price, and they do it. We have recently had an invasion of small companies from Turkmenistan who sold consumer goods at a low price. It also related to check to prices.

- That is, the authorities today are not ready to give up control...

- No. Otherwise, prices will significantly rise. First, they sell out cheaper things on fairs then in Turkmen shops... All talks about price stability are conditional.

- Will the authority withstand the inflation plans it has determined?

- If there are no emergencies before the end of the year, it will withstand. Then the situation can change because the population is tried to be given as much money as possible before the end of the year, but there are no economic grounds for it. That is, the salary can grow by several percent, it will be a nominal growth which turns into the inflation.