Has It Begun?

Prices have not yet been released, and inflation is already accelerating.

This year, the government has planned inflation of no more than 5%. So far, however, the pace of price growth is not very consistent with the forecasts. What is especially disappointing is that prices have not yet been released, and inflation is already accelerating. Moreover, products have been rising in price for a month in a row above the average inflation rate in the country.

According to Belstat, inflation in annual terms in February accelerated to 5.6%, after it was 5.2% in January and December. For the month, prices increased by 1.3%, and since the beginning of the year – by 2%.

The main reason for the monthly acceleration was the planned increase in tariffs for housing and utilities services. During the month, they rose in price by 10.5% and provided the main increase in prices in the service sector.

But, in fact, not everything went according to plan. The growth rate of food prices has been overtaking the average inflation rate for a month in a row. And by the end of February, food inflation accelerated even more. If in January the prices for products in annual terms increased by 6.5%, the results of February – by 6.7%.

And well, the acceleration of inflation would have begun after the abolition of price regulation. At that time, it was possible to at least blame market practices that were alien to the Belarusian socio-economic model. But the most offensive thing is that they have not yet managed to cancel the price regulation, and inflation is already accelerating. Moreover, it accelerates the most where prices regulate the most. It is not surprising, therefore, that the Belarusian authorities are in no hurry to release prices, if already prices do not want to stand still.

Because, unfortunately for the Belarusian authorities, prices in Belarus do not exist in an economic vacuum. Accelerating inflation in Russia is putting pressure on Belarusian price stability. Therefore, price regulation is becoming worse at regulating prices.

But it still copes well with the financial indicators of Belarusian enterprises. Last year, the profitability of sales in Belarus fell to 6.4% from 7% in 2023. The profitability of Belarusian trade has been hanging around zero for many months. Last year, 618 Belarusian companies were unprofitable, which is 7.8% more than a year ago.

Therefore, even the Belarusian authorities admit that their price regulation was not such a wonderful invention, as they recently told us themselves.

“If it was a comprehensive document, there wouldn't be a bunch of complaints. On the part of producers, sellers and others, ”Aliaksandr Lukashenka said at a meeting dedicated to the reform of the price regulation system.

However, it was impossible to reform the price regulation system at this meeting. Lukashenka instructed the government to prepare its proposals by April. And although the authorities want to change the price regulation system so that nothing changes in it, they will still have to do it. And the longer they postpone, the higher the risks become. Even with price regulation, inflation cannot be driven into its limits. And without regulation, things will get even worse.

Feliks Mirski, Belarusians and the Market

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