Inflation in Belarus reaches shocking levels

The unrestrained rise in prices is also in the dollar equivalent.

The rise in prices is shocking. This year, inflation in Belarus is the highest in 5 years, since 2016. Inflation is especially noticeable against the background of a stable dollar exchange rate. This means that the unrestrained rise in prices in Belarus is also in the dollar equivalent, Infobank writes.

And this is even though the authorities are trying in every possible way to prevent the growth of inflation, having announced back in February the freezing of prices of 62 "socially important goods" in the country - the decision of the Council of Ministers № 100 of February 23 "On temporary measures to stabilize the prices of socially important goods of prime necessity."

Among other things, it says that, from March 1, "the change in prices for socially important essential goods cannot exceed 0.2 percent per month."

In June, the monthly consumer inflation index (against the previous month) was officially 0.65%. And the average CPI for March-June is 0.66%.

The June CPI this year turned out to be higher than the May one, although, it should be lower based on the seasonality of this indicator.

In Belarus, the seasonality of the dynamics of the monthly consumer price index is pronounced: the year begins with a high CPI in January, after which the index goes down, reaching a “bottom” in August, and then rises again.

Seasonality is created by the dynamics of prices in the sector of food products, which occupy the largest share in the consumer basket, according to which the CPI is calculated.

Thanks to this, there are the lowest indices of the year in the summer months, often showing even deflation.

Belstat takes into account price increases in several formats. One of them is “the annual inflation index for the period from the beginning of the year to the corresponding period of the previous year.” This is the annual CPI of "period-to-period."

And it amounted to 108.8% in June: consumer prices in January-June in 2021 are higher than in January-June 2020, by 8.8%.

And this is the highest percentage for this period of the year since 2016 - in 5 years.

And the annual CPI in the "inflation index to the corresponding month of the previous year" format rose to 109.9% in June - consumer market prices in June 2021 are 9.9% higher than they were in June 2020.

This is the highest percentage since January 2017. Although in July 2018, the annual inflation of this format decreased, it was to a historical minimum in Belarus - 104.06%.

The rise in the annual CPI of "month-to-month" has been going on in Belarus for exactly one year - since mid-2020.

The most inertial inflation indicator, the average annual index, is also on the rise (12-month average prices to a percentage of prices for the corresponding 12-month period a year earlier).

For the reporting period (from July 2020 to June 2021), the average annual consumer inflation was, based on official Belstat data, 7.47% (against the period "July 2019 - June 2020").

Taking into account the persistence of this indicator, the growth of average annual inflation will continue further.

But even these percentages of inflation, the highest in 5 years, make Belarusians distrustful: not only by perception, but according to last year's preserved receipts, inflation in Belarus is higher than according to the official data of Belstat.

Here we calculated our individual inflation using the tool of Belstat, by the way.

Our inflation turned out to be 34.68% per year.

Belstat itself believes that overall inflation in Belarus is significantly higher - showing a much higher GDP deflator index than the CPI.

The GDP deflator is the inflationary adjustment of the main economic indicator of the gross domestic product; it is the percentage of price increases in the entire economy, not only in the consumer market, and an indicator of general inflation in the country.

Since few pay attention to the “GDP deflator index” indicator, and, moreover, it is not used to assess the dynamics of the living standards of the population, there is no temptation for it to output a better result, as is often the case with the CPI.

And percentages of the general inflation in Belarus that the GDP deflator shows, even according to the official data, are shocking.

Thus, the GDP deflator index in the period-to-period format, showing the country's overall annual inflation, in June amounted to 115.8%: prices in January-June 2021 are higher than prices in January-June 2020 by 15.8%.

And the monthly GDP deflator index jumped to 125.6% in general: prices in June 2021 are higher than prices in June 2020 by 25.6% (this is a calculated indicator based on Belstat GDP data).

This is partly due to the fall in prices in the economy a year ago during the global covid crisis (remember the fall in oil prices to negative values).

The most inertial indicator, the average annual GDP deflator index (also calculated), is also rapidly rising: it has already grown to 113.4%: the overall average annual inflation in June was 13.4%.

So much the prices in the entire economy on average for the period "July 2020 - June 2021" are higher than the average prices for the period "July 2019 - June 2020." The current rapid growth will continue in the coming months.

So, the general inflation in Belarus is significantly higher than the official consumer inflation.

1. in the "period to period" format:

annual CPI - 8.8%

GDP deflator - 15.8%

2. in the "month by month" format:

annual CPI - 9.90%

GDP deflator - 25.6% (estimated)

3. average annual format:

average annual CPI - 7.47%

GDP deflator - 13.4% (calculated).

The underestimation of the percentage of consumer inflation, both by administrative retention of prices and through the methodology for calculating it, causes the average citizen to distrust the official data.

But even according to the data, inflation in Belarus is now higher than in all neighboring countries.