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Prices are Waiting In The Wings: What Will Rise in Price in Belarus in the near Future

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Prices are Waiting In The Wings: What Will Rise in Price in Belarus in the near Future

We must prepare for a surge in inflation.

Annual inflation in Belarus is still in double digits. At the same time, inflationary and devaluation expectations of the population remain high, which carries additional risks for the economy. For example, against this background, Belarusians continue to take deposits from banks. Ahead is an increase in prices for some goods and services, as well as an increase in tax rates. Experts predicted what will happen next with prices in Belarus, writes zerkalo.io.

How our cost of living will rise in price in the near future

According to the plans of the authorities, mobile communications, Internet, landline telephone communications, postal services should rise in price by 4% in the fourth quarter. This is intended to compensate for the increase in costs but not higher than the level of projected core inflation.

Fares on public transport should also rise by the end of the year, the expected increase is 6.8% or 5 kopecks per trip (we are talking about the rise in the price of one ticket). In October-December, passenger fares for suburban road transport are also expected to rise by 11.1% or 1 kopeck per kilometer.

From the beginning of 2022, Belarus plans to raise tariffs for housing and communal services and increase many taxes. Let us remind you that, this year, the officials gave the Belarusians a New Year's “gift” - from January 1, they raised the VAT on medicines, medical products, children's goods, many food products, which affected retail prices.

"The National Bank's room for maneuver is limited." What is the inflation forecast for international organizations?

Experts of the international agency S&P Global Ratings predict that inflation in Belarus will be 9.3% by the end of this year and 8% in 2022.

“In our opinion, the National Bank of Belarus faces a difficult choice between supporting growth and fulfilling its mandate to ensure price stability. Inflation has been above the target since mid-2020, peaking at 9.9% in June 2021 due to currency depreciation, value-added tax, higher administrative prices, and higher food prices,” the agency said. “Despite past progress in the transition to more flexible monetary conditions, including a floating exchange rate regime, we believe that the NB of Belarus has limited room for maneuver.”

Agency experts also draw attention to the fact that the National Bank has suspended the transition to the inflation targeting regime (what does targeting mean and what alternatives are, you can read the link). “The National Bank has focused rather on broad money supply as its interim target for monetary policy. The institution also stopped making pre-planned decisions on the interest rate,” S&P Global Ratings specifies. All this, according to experts, carries additional risks for accelerating inflation.

Experts from the Eurasian Development Bank predict inflation in Belarus at 9.2% this year and 6.5% in 2022. “The slowdown in inflation in 2022 may be facilitated by the slowdown in the growth of prices for raw materials in the world and the gradual recovery of global supply chains,” the EDB analysts believe. “At the same time, the increased inflationary expectations of the population and enterprises will limit the rate of inflation approaching the target levels of the National Bank.”

Among the risk factors that may provoke a rise in prices are the uncertainty of sanctions, the decline in the grain harvest in Belarus, as well as the likelihood of an increase in emission lending to temporarily maintain high rates of GDP growth.

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