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"The Spring Will Jump Out": The Economist Predicted an Increase in Prices for Some Goods in Belarus

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"The Spring Will Jump Out": The Economist Predicted an Increase in Prices for Some Goods in Belarus

Trade and manufacturers will be forced to compensate for the losses.

Prices for some goods have been frozen in Belarus; however, where there is no state regulation, they rise noticeably. What will be the dynamics of inflation in Belarus? Charter97.org discussed this with Baris Zhaliba, Doctor of Economics.

- If there is no state regulation for some goods, then prices rise due to inflation. The prices that have been fixed are at a standstill, which gives an additional impetus to the growth of prices for other goods.

Trade still needs to get some kind of profit, to be profitable, so it begins to play out this fixation and raise prices for goods that have not been frozen by the authorities.

- Are such restrictions effective in our time? How do they hit manufacturers and chains?

- Naturally, price-fixing has negative consequences. For consumers, it seems to be acceptable because prices for goods do not rise, but for trade and manufacturers, on the contrary, they receive less profit. As the saying goes, price-fixing is a sharp weapon.

In general, we, the population, live normally with these prices, but manufacturers and trade do not; therefore, in order to maintain profitability, they begin to compensate for these losses by raising prices for other goods.

As a result, we are not winning. Only those who have a poorer basket of goods, which is reduced to essential goods, win.

- Can we expect that prices for “frozen” products will skyrocket at one point?

- Of course, practice shows this. If you fix prices, then the spring is acting, trying to break out. When the time comes to release prices, and they cannot be fixed for more than 90 days, then, as they say, the spring begins to straighten, and there will be a jump in prices for precisely those goods that were held administratively.

- Can such administrative actions affect the quality of the products?

- It's difficult to talk about quality because prices are fixed for a short period. It has no direct relation to quality. Quality is provided by the manufacturer, but, naturally, if he does not make a profit, then, in the end, he has less money left to modernize production, and if you do not modernize production, then quality suffers.

- What vivid examples of the negative consequences of such restrictive measures you could give?

- The brightest is when goods begin to disappear from store shelves because they are relatively cheap, and the population begins to disassemble the products. We have not had such situations for a long time, but, if you remember the 90s or plunge into the years of the Soviet economy, then it was absolutely in short supply there. Such a situation should not be allowed.

In recent years, the authorities have learned a lesson and are not doing a long fixation. As soon as a deficit begins to appear, the authorities immediately release prices. In recent months, I don’t remember that we had empty shelves, at least in the capital or regional cities. As for the periphery, I don't know, maybe people will remember it.

- Photos of half-empty shelves in stores began to appear on the Internet. Maybe these are the same cases?

- I think these photos are not from Minsk. Maybe from peripheral small towns or villages, where there may be such deficits. Naturally, our journalists and people are smart - they immediately grab these shots and publish them. We will assume that the deficit has not yet acquired a general character, but the authorities should think about it. People also live on the periphery.