The struggle of the state with inflation. How to fight inflation? Methods and methods Is it necessary to fight inflation briefly

Naturally, the state must control the activities of exporters and completely neutralize speculators. It must be understood that the adoption of urgent anti-inflationary measures will not lead the country out of the crisis, but will only slow down the depreciation of the national currency. For a complete solution of the problem, it is necessary to change the strategic course of the state. How to do it? Read on! Strategic Methods of Combating Inflation Rising inflation rates indicate the vulnerability of the country's economy. The solution to the problem suggests itself - we urgently need to strengthen the economy. This will help the strategic methods of combating inflation:

• Achievement of set inflation targets. During a crisis, the state is obliged to take control of the situation as soon as possible. And the first thing to do is to return financial guidelines to business and the population.

Methods of fighting inflation

The main tactical decisions are to increase demand or increase supply. In general, methods of fighting inflation depend on the views of the country's government. Certain types of tactics and strategies are chosen based on the views of political leaders, plans for the development of the state and the reasons for the rise in prices.

Attention

In order for inflation targeting as a method of combating inflation to give a result, it is necessary to take a whole range of measures. There are three targeting areas: deflationary policy, exchange rate policy, and income policy. Each of the economic methods of fighting inflation deserves special attention.

4. ways to fight inflation

It leads to a drop in profits and production volumes, which breaks the balance of supply and demand. There is also the concept of stagflation, which means a simultaneous rise in prices, a fall in production volumes with an increase in unemployment. This phenomenon is associated with supply and demand inflation.

Important

The reasons are sectoral distortions of the market and lack of competition. Stagflation is rightfully considered the most severe form of inflation. On the basis of the rate of price growth, inflation is divided into normal (price growth of 3-3.5% per year), creeping (10%), galloping (20-200%) and hyperinflation (from 50% price growth in 3-4 months).

essence of inflation. causes, types, methods of struggle.

There is a flight from money to valuable goods, regardless of the need for them. The consequence of inflation is also a violation of the functioning of the monetary system. With inflation, creditors incur losses, because receive debts in depreciated money.
The crisis of public finances is aggravated. Inflation can become a factor in a currency crisis, i.e. discrepancies between official and market exchange rates. Methods of combating inflation can be direct and indirect. Most often, the following pattern is manifested: the more critical the situation, the more urgent are the direct methods of government and central bank influence on the economy and the money supply as its component.

Inflation

Inflation is, as it were, an extra tax on the population, and as a result, the population's income lags behind the constantly rising prices. All categories of workers, including employees and pensioners, suffer from inflation. Inflation harms the population, also due to the depreciation of their money savings.

Another consequence of inflation in the social sphere is the redistribution of income and capital between different strata of society. With inflation in the economy, there is an uneven rise in prices for goods, this exacerbates the inequality of profit rates in various sectors of production, which leads to an expansion of production in some sectors, a reduction and decline in others. There is an overflow of capital from production to the sphere of circulation, speculative trading is encouraged, where capital quickly turns around and makes a profit.

Inflation reduces effective demand and makes it difficult to sell goods.

Inflation and how to deal with it

To date, such a term as "inflation" is one of the most common economic concepts, which is used by both financial experts and ordinary citizens. At the same time, not many people understand the true meaning of this phenomenon and the mechanisms of influence on it. Today we will consider methods of combating inflation and find out what it is in general.
Definition To answer the question of what inflation is, in simple terms, you can do this: inflation is the process of depreciation of money, that is, a reduction in their purchasing power. To put it even more simply, the amount of goods and services that can be bought today for, say, $100, in a year will no longer be available for that amount. It is noteworthy that this process occurs constantly, but its speed is always different and depends on the economic climate of the state.

Ways to fight inflation

As for anti-inflationary tactics, it must be aimed at reducing demand without falling supply or at increasing the supply of goods and services without increasing demand for them. That is, a balance of supply and demand must be maintained. The introduction of preferential taxation of enterprises that sell by-products of production, information, services and thus form new markets can help the cause.

Info

Another powerful tool for slowing down inflation is the privatization of state property. Conclusion. Inflation is one of the most dangerous economic processes. It not only reduces the purchasing power of money, but also breaks the levers of economic regulation, hinders structural transformations in industries.

Methods of fighting inflation. what is inflation in simple terms

There is an overflow of capital from production to the sphere of circulation, speculative trading is encouraged, where capital quickly turns around and makes a profit. Inflation reduces effective demand and makes it difficult to sell goods. There is a flight from money to valuable goods, regardless of the need for them. The consequence of inflation is also a violation of the functioning of the monetary system. With inflation, creditors incur losses, because receive debts in depreciated money. The crisis of public finances is aggravated. Inflation can become a factor in the currency crisis, ᴛ.ᴇ. discrepancies between official and market exchange rates. Methods of combating inflation are direct and indirect. Most often, the following pattern is manifested: the more critical the situation, the more urgent the direct methods of influencing the government and the central bank on the economy and the money supply as its component.
Or, to put it simply, scarcity, natural or artificial. Demand for goods exceeds the volume of commodity mass, which creates favorable conditions for raising prices by producers, regardless of the cost of production. Also, inflation can occur from the state budget deficit, that is, in the case when the state's expenditures noticeably exceed its revenues. Another reason could be overinvestment (the volume of investment is above the production level of the economy) or a sharp increase in wages that do not correspond to the increase in production and labor productivity, as well as the establishment of fixed prices for goods by the state, which will cause distortions in the structure of demand. Inflation can be caused by both internal and external causes.

The most important condition for suppressing the depreciation of the currency is the reduction of inflationary expectations of investors, businessmen and ordinary citizens. In this field, the state should at least achieve a balanced budget, and as a maximum, create a reserve for economic growth and the income of the population in the future. At the level of the family budget, in order to fight inflation, it is advisable to invest your savings in areas that bring profit, which is enough to at least cover the growth of inflation.

Otherwise, the amount of money will grow, and their nominal value will gradually fall. Unfortunately, it is completely impossible for anyone to avoid inflationary processes. However, by learning how to properly manage your finances, you can reduce the impact of these processes on the family budget to a minimum.

Inflation Control Methods Briefly

It provides for two main measures: the formation of an anti-inflationary strategy and the development of anti-inflationary tactics. An anti-depreciation strategy does not have an immediate effect on the economy. It is aimed at reducing inflation in the long term, and not at the moment. The main goal of this strategy is to reduce inflationary expectations. The following tools are used for this:

1. Strengthening market mechanisms.
2. Change in budget policy: increase in revenues and decrease in government spending.
3. Strengthening control over the financial system and the growth of the money supply in the country's economy.
4. Reducing the dependence of the national currency on external factors.

If the strategy is aimed at the long term, then tactics, on the contrary, involve short-term decisions designed to change the state of the market here and now.

Inflation(from Latin inflatio - swelling) is an excessive increase in the money supply in circulation compared to the real supply of goods, which in turn leads to a fall in the purchasing power of money and an increase in prices for goods and services.

Inflation is a two-way process:

1. There is a general increase in prices;
2. There is a depreciation of money.

1. growing rapidly;
2. remain stable;
3. Decreases, but the average level rises.

There is a depreciation, for 1 ruble (conditionally) you can buy less and less goods.

inflation

Economic and social consequences

These implications are complex and varied. A small inflation rate helps to temporarily revive the conjuncture through rising prices and profit margins. As the rate of inflation increases, it turns into a real obstacle to production and exacerbates economic and social tensions in society. Galloping inflation disorganizes production, causes serious economic damage, and hinders the conduct of economic policy. Also, uneven price growth increases disproportions between sectors of the economy, distorts the system of consumer demand and exacerbates the problem of selling goods on the domestic market. Galloping inflation activates the flight from money to goods, exacerbates the shortage of goods, and undermines incentives for money accumulation. The savings of the population are depreciating, the losses are borne by banks and other lending institutions. Inflation is, as it were, a supertax on the population, and as a result, the lag of the population's income from continuously rising prices.

The damage from inflation is suffered by all categories of workers, incl. employees and pensioners. Inflation harms the population, also due to the depreciation of their money savings. Another consequence of inflation in the social sphere is the redistribution of income and capital between different strata of society.

With inflation in the economy, there is an uneven rise in prices for goods, this exacerbates the inequality of profit rates in various sectors of production, which leads to an expansion of production in some sectors, a reduction and decline in others. There is an overflow of capital from production into the sphere of circulation, speculative trading is encouraged, where capital quickly turns around and makes a profit. Inflation reduces effective demand and makes it difficult to sell goods. There is a flight from money to valuable goods, regardless of the need for them. The consequence of inflation is also a violation of the functioning of the monetary system. With inflation, creditors incur losses, because receive debts in depreciated money. The crisis of public finances is aggravated. Inflation can become a factor in the currency crisis, ᴛ.ᴇ. discrepancies between official and market exchange rates.

Methods of combating inflation are direct and indirect. Most often, the following pattern is manifested: the more critical the situation, the more urgent the direct methods of influencing the government and the central bank on the economy and the money supply as its component.

Indirect methods include regulation:

The total mass of money through the management of the ʼʼprinting pressʼʼ;

Interest rates of commercial banks through the management of the Central Bank;

Mandatory cash reserves of commercial banks;

Operations of the central bank in the open securities marketᴦ.

Indirect methods cannot work at full capacity in our economy due to its insufficient "marketability". A full-fledged securities market, incl. The market for government obligations is not sufficiently developed in our country, and, accordingly, the Central Bank cannot influence the money supply through the purchase and sale of securities.

The direct impact of a change in the purchasing power of a currency includes: methods , how:

Direct and immediate regulation of loans and their distribution by the state;

State regulation of prices;

State regulation of wage limits;

State regulation of foreign trade and operations with foreign capital;

State regulation of the exchange rate.

The practice of direct regulation of the money supply is widespread in the West. In the 1960s and 1970s, the United States repeatedly froze the prices of many goods. A decade and a half after the Second World War, it took the countries of Western Europe to begin price liberalization, and even then it was incomplete. France completely liberalized prices in the domestic market only in 1986. F. Roosevelt led the United States out of the deepest crisis of the 1930s through the most severe state regulation of the economy. In most countries, there were special laws that limited the income from commercial intermediation.

Today, in the world practice, in order to contain and prevent the process of inflation, special anti-inflationary programs are being put into effect. Οʜᴎ are a set of measures in the field of economics, finance, money circulation, credit, wages, employment, international monetary and credit relations.

It is known that there are several measures to control inflation. These include budgetary, tax, monetary and foreign exchange measures to regulate prices, wages, etc.

So, for example:

a) to overcome the budget deficit, state budget expenditures are reduced;

b) to limit the money supply increases taxation, usually in the form of indirect taxes;

c) monetary policy is used to limit bank loans, increase the discount rate of the central bank: the percentage of the rate on passive and active operations is regulated, control is exercised over the resources of banks, etc.

d) to regulate prices, prices for individual goods are blocked.

With the mediation of the state, they use the so-called "income policy" - harmonization and linkage of wage growth rates and prices.

But the latest and most effective measure in the fight against inflation is the implementation of monetary reform in the country.

By methods of conducting All monetary reforms are divided into three types:

1. Confiscation and exchange of money at a deflationary rate in order to sharply reduce the supply of paper money;

2. Temporary (full or partial) freezing of bank accounts (deposits) of the population and entrepreneurs;

3. Combination of the first and second methods. For example, West Germany.

All this can be attributed to the methods of shock therapy, ᴛ.ᴇ. free pricing. The effectiveness of these methods depends on how far the economy of any country is from the market, ᴛ.ᴇ. its preparedness and market structures. The resulting rise in prices stimulates the production of goods and services. But with excessively disrupted market structures, price increases do not lead to positive results, but take on the character of prolonged hyperinflation.

Types of monetary reforms:

Nullification- means the announcement of the cancellation of a heavily depreciated unit and the introduction of a new currency

Revaluation- restoration of the former exchange rate of the monetary unit, ᴛ.ᴇ. an increase in the official exchange rate against the US dollar, and then the International Monetary Fund registers this.

Devaluation- Decrease in the official exchange rate of the monetary unit against the US dollar.

Denomination– method of crossing out zeros, ᴛ.ᴇ. scale up prices.

Methods of combating inflation - the concept and types. Classification and features of the category "Methods of fighting inflation" 2017, 2018.

He says that the country's economy is sick and needs urgent treatment. The speed of her recovery largely depends on the professionalism of the "attending physicians" - the leaders of the state. After all, you can direct forces only to eliminate the symptoms of the disease, or you can - to identify and eliminate its causes.

What are the directions to take?

In order to successfully combat inflation, it is necessary to act comprehensively in two directions:

1. 1. Take urgent anti-inflationary measures.
2. 2. Take a strategic course to strengthen the state's economy.

The essence of this method is simple - urgent measures will reduce the rate of inflation growth, and a strong economy will be able to effectively withstand future inflationary attacks on the state. Want to know exactly what to do? No problem! Let's start with the first point - urgent anti-inflationary measures.

Urgent measures to reduce inflation

People wake up in the morning and find out that the dollar has tripled in price. What are they doing? That's right - everyone starts to get rid of their savings in a panic. Where does this lead? And this leads to even higher inflation. Do you want to know why this is happening? Read the article:. In short, it’s all the fault of an extra unsecured money supply.

At this point, the state should take urgent measures to reduce the rate of inflation:

• Limit the flow of new money into the economy. The main channel through which money enters the economy is loans. To block it, it is necessary to make it unprofitable to take loans. To do this, the Central Bank raises, and after it, commercial banks increase loans. As a result, it becomes more profitable to put money on deposit than to take out a loan.

  It must be understood that this will reduce not only the inflation rate, but also economic activity in the country - everyone will go into savings mode, which will lead to an economic recession.

• Control the banking system. If you have read, then you probably know that she strikes at money. Banks manage money. It is necessary to establish control over financial flows in the country. It is impossible to allow the issuance of non-repayable loans, and it is also necessary to ensure that banks lend to strategically important sectors of the economy.
• Take control of prices for socially important goods. In a period of rapid inflation, the state must control the prices of bread, flour, sunflower oil and other essential commodities. People need to be reassured – let them know that the situation is under control and everything will get better soon.

  But simply fixing the prices of these goods or limiting the markup percentage will not be enough. It is also necessary to support agricultural producers: provide them with preferential loans, reduce taxes for them, regulate purchase prices for the resources they consume, etc. In general, it is necessary to create all the necessary conditions for the profitable operation of these enterprises in a crisis.

• Control the activities of exporters. For whom does the state hold back the rise in prices for socially important goods? For their own population. That is, at such prices, these goods should be sold only on the domestic market, and they should also be in sufficient quantity.

  What can enterprising "smart speculators" who do not care about their country and people do? They can buy goods at low prices and export abroad. Naturally, the state must control the activities of exporters and completely neutralize speculators.

It must be understood that the adoption of urgent anti-inflationary measures will not lead the country out of the crisis, but will only slow down the depreciation of the national currency. For a complete solution of the problem, it is necessary to change the strategic course of the state. How to do it? Read on!

Strategic methods of fighting inflation

Rising inflation rates indicate the vulnerability of the country's economy. The solution to the problem suggests itself - we urgently need to strengthen the economy. This will help the strategic methods of combating inflation:

• Achievement of set inflation targets. During a crisis, the state is obliged to take control of the situation as soon as possible. And the first thing to do is to return financial guidelines to business and the population. To do this, it is necessary to timely provide accurate information on real and planned inflation indicators for the current year. This will accelerate the process of economic recovery and strengthen public confidence in the authorities. However, you need to understand that:

  Inflation targets must be true.
  Otherwise, the government will completely lose confidence in itself, and the country will be overwhelmed by another wave of crisis.

• Change in budget policy. The fall of the economy leads to a shortage of money in the state budget. The issue of unsecured money supply will not solve the problem - the process of depreciation of money will only be launched, and inflation will continue to rise.

  Alternatively, you can apply for financial assistance from countries with stronger economies, but this is the path to debt. Therefore, it is necessary, first of all, to revise the budgetary policy of the state - to reduce expenditures and increase the revenue side of the budget. For example, to freeze financing of unpromising projects, to reduce the bloated state apparatus, to carry out restructuring of production, to ensure the receipt of full tax payments, etc.

• Creation of comfortable conditions for business development. Entrepreneurs are a powerful driving force capable of reviving the economy and leading the country out of the crisis. What need to do? At a minimum, just not interfere with their work, but as a maximum, create a favorable environment for the development of small and medium-sized businesses (support at the legislative level, elimination of bureaucratic barriers, fight against corruption, moderate taxation, etc.).
• Import substitution course. Particular attention should be paid to the development of own manufacturing enterprises - they are the ones that produce GDP, and it is they who reduce the country's dependence on imports. And the less this dependence, the more resistant the economy to external shocks.

Here we have considered the main methods of combating inflation. At first glance, they seem simple and straightforward, but putting them into practice can be quite difficult. However, nothing is impossible in our life! The main thing is to never give up!

So, friends, this concludes our cycle of articles on inflation. We hope they were informative and helpful!

Doctor of Economic Sciences I. OSADCHAYA.

Inflation is called a steady rise in prices, due to which, ultimately, money, incomes and savings of the population depreciate. even the slightest inflation is fraught with enormous dangers for the development of a modern money economy. It is no coincidence that in the economic policy of all countries (including the most developed ones) anti-inflationary measures - primarily monetary measures aimed at limiting the growth of money supply - are of paramount importance. the well-known English economist J. M. Keynes wrote back in the 1920s (mainly under the influence of the colossal post-war inflation in Germany, defeated in the First World War): “there is no more cunning, and at the same time more sure way to overthrow the existing social order than the depreciation of money.

Science and life // Illustrations

After the monetary reform in Germany (1923), junk dealers bought up old banknotes by weight.

When inflation sweeps goods off store shelves, a line can line up for men's hats. Drawing by Danish cartoonist H. Bidstrup. 1950s.

Dynamics of the consumer price index in 1992 - 2001. For almost two years (from mid-1992 to mid-1994), the monthly growth rate of consumer prices exceeded 15%.

Annual growth rates of the consumer price index (CPI) in 2000-2008.

On the conveyor - processed cheese "Druzhba", one of the great brands of the Soviet era, when prices for all goods were fixed.

Share of social spending in GDP as a percentage (2006). The figures for developed countries do not include spending on education, which reaches 5-6% of GDP. In Russia, these costs amount to 1.3% of GDP.

CAUSES OF INFLATION AND HOW TO FIGHT IT

Inflation is a monetary phenomenon associated with an excessive release of money into circulation compared to the supply of goods. However, this increase in money occurs for various reasons. And the first of them is the growth of incomes of the population, not supported by a corresponding increase in the production of goods. This is how excess demand appears, pushing prices up, a phenomenon that is especially evident in the conditions of a war economy. In this case, it is customary to speak of "demand inflation".

Inflation is also caused by an increase in costs, which entails an outpacing rise in prices for some goods or services of natural monopolies, such as utilities. Then they talk about "cost-push inflation". True, it is almost impossible to separate these two processes in real life, and disputes about what came first - “chicken or egg”, demand or costs,

Often they don't make sense. Both processes are interrelated. The increase in costs, and hence prices, requires compensation for the dwindling incomes of the population (wages, pensions, benefits, etc.). The new injection of money into the economy, in turn, increases demand, which puts pressure on prices. And everything repeats itself on a new round of a vicious inflationary spiral.

Inflation can take many forms. In a regulated economy, primarily a planned, command economy (such existed in the USSR), as well as in wartime conditions, when prices are fixed, it can be hidden - this is the so-called suppressed inflation. Its companions are the shortage of many products, a surge in shadow trade, a sharp increase in prices in the markets, etc. However, the abolition of such regulation (after the war or in countries that have moved from an administratively regulated to a market economy) often gives rise to "galloping inflation" with wildly rising prices. It arises from the so-called huge "money overhang", in other words - the discrepancy between the cash supply and the insufficient amount of goods.

Inflation is sometimes expressed in a relatively slow, almost imperceptible rise in prices - it is called creeping. However, the long-term consequences of such inflation have a very harmful effect on the state of the monetary system and the well-being of the population.

During periods when demand begins to exceed supply, inflation tends to increase. However, periods are known (for example, the 1970s in developed countries) when inflation and a decline in economic growth rates combined into a new phenomenon called “stagflation” (stagnation plus inflation).

The so-called waiting moments play a significant role in the development of the inflationary process. The expected rise in prices pushes the population to buy goods. Thus, an artificial shortage of some of them is created, and consequently, prices rise, which makes it necessary to demand an increase in wages in advance (in the presence of a system of collective agreements). This kind of inflationary expectations is especially difficult to bring down.

Representatives of the main directions of modern economic theory differ in their assessment of the role of one or another reason that generates inflation. Hence the differences in the proposed recipes for anti-inflationary policy.

Among theorists, primarily Western ones, the most common explanation for inflation is an excessive increase in the money supply. Supporters of this point of view - monetarists - proceed from the quantity theory of money. Here is its essence: any increase in the money supply, exceeding the growth rate of the gross national product, inevitably gives rise to a rise in prices. What are the reasons for this inflation? In the expansionary monetary policy of the central bank and the growth of government spending. Hence the methods of anti-inflationary "treatment" offered by the monetarists: cuts in budget spending and severe monetary and credit restrictions. The main task of the central bank, in their opinion, is to maintain stable prices and the stability of the monetary system, which allows the growth of the money supply only in accordance with the growth of GDP.

This, according to monetarists, is the main “rule” that the government should be guided by, regardless of the nature of the economic situation and the level of unemployment, which require just an increase in government spending to revive the economy and stimulate production growth.

This detachment of theorists is joined by supporters of the so-called institutional theories, who consider excessive government spending to be the main cause of inflation - it is generated by the interests of certain groups of the population, political parties and the ruling bureaucracy. The main counteraction to inflation, in their opinion, is freedom of competition, free market relations and, above all, limiting the growth of state intervention in the economy, while the state bureaucracy is vitally interested in the opposite. Therefore, such a bureaucracy cannot be expected to truly control or limit this growth. Therefore, such restrictions should be introduced in the form of constitutionally fixed rules that would protect the market system from the distorted influence of excessive redistributive activities of the state.

There is also the Keynesian theory of inflation, also associated with the pressure of money demand. However, according to this theory, not every increase in money demand causes inflation. On the contrary, an increase in the amount of money in circulation when there is underemployment, high unemployment and a significant underutilization of production capacity in the country can, according to Keynes, stimulate the growth of production without affecting prices. Genuine inflation appears when there is full employment of human and production resources. Then a further increase in money demand leads to an increase not in production, but in prices, that is, to inflation.

Other economists emphasize the role of costs. They see the key element that sets in motion the inflationary spiral (costs - prices - costs) not so much in wages as in the policy of trade unions, which, when concluding agreements with employers, seek special clauses on a possible increase in wages if inflation increases - that is, about its indexing. But the fact is that large corporations easily translate rising wage costs into prices. Thus the mechanism of continuous price increases is built into the modern economy of corporations and powerful unions.

Theoretical discussions about inflation and ways to combat it appeared in the conditions of a developed market economy. To some extent, they can explain the nature of inflationary processes in our country. But, I repeat, only partially. In our economic system, in its sectoral structure, there are so many features, or rather, disproportions, without which it is impossible to explain such a multifaceted process as inflation.

It is not the task of the author of this article to show how inflationary processes developed there, “over the hill”. I can only say that the economies of Western countries, especially the United States, experienced the greatest "suffering" from inflation in the 80s of the last century, when fuel prices rose sharply during the oil crisis. In the United States, much was written about double-digit inflation, which reached 14% per year. However, by the end of the 1980s, thanks to measures taken both in terms of costs and in relation to the money supply, inflation fell to 5-6%. In recent decades, both in the USA and in the countries of the European Union, the annual rate of price growth has been kept at the level of 2-2.5%. Today, inflation manifests itself primarily in world markets - in the rapid rise in prices for basic resources (oil, gas and metals) and food products.

FEATURES OF INFLATION IN RUSSIA

Many believe that in Soviet times, until the beginning of the reforms of the 90s of the last century, there was an increase in prices (they were fixed for all goods), which means that inflation in Russia did not exist at all. In fact, the inflationary process developed - quietly and covertly. Inflation was subdued. According to some reports, the annual rate of price growth in the 80s was 1.5%. Soon, food almost disappeared from store shelves. Older people remember "sausage excursions" to Moscow. In many cities, a kind of card system has appeared - coupons, grocery orders. Money meant little, there was almost nothing to buy with it.

The transition in the 90s to economic reforms - and they began with the liberalization of prices in an environment of general shortages and the collapse of production - made inflation open and truly "robbery". The “money overhang” (that is, the gap between the amount of money thrown into circulation and the volume of marketable output), which opened up under these conditions, collapsed. Inflation has become catastrophic. In 1992 alone, prices rose 26 times, and in the following year - another 10 times. Consumer prices in the first half of the 1990s grew by 15-18% monthly.

The measures taken (above all, the sharp tightening of monetary policy) led to the fact that by 2000 inflation began to weaken. The annual increase in consumer prices in 2002 was 15.1%, in 2003 - 12%, in 2004 - 11.7%, in 2005 - 10.9%, in 2006 - 8.2% . In 2007, it was planned to bring inflation up to 6-7%, and in 2008 - up to 4-5.5%. And suddenly, the autumn of 2007 gave an unexpected outbreak of price growth, overturning all forecasts. The government was forced to take emergency administrative measures to freeze prices for socially important products - six types of food.

In just one month, October 2007, consumer prices rose by 1.6%, and food prices by an average of 3.3% (this is more than three times the price increase in September). Some food products managed to rise in price even before the price freeze was especially strong: prices for sunflower oil rose by 60% from July to October, for butter, milk and dairy products - by 50%, for eggs - by 40%. The rate of inflation in 2007 as a whole was, according to official data, 12% (it should not be forgotten that the above figures are average figures). According to the calculations of the Center for Macroeconomic Forecasting (cMASF), during 2007, goods in the "poor basket" rose in price by 15% (in 2006 - by 9%).

What caused such a sharp revival of the inflationary trend? What is its nature - short-term or long-term? “Our” and “not our” specialists argue a lot about this. Where to look for the original cause? Is it an excess of demand resulting from the excessive issuance of money into circulation, or an increase in costs? In my opinion, such a contrast is fundamentally wrong. For, as already noted, both causes are interdependent, and no matter where to start, in the end we will certainly get a vicious inflationary spiral.

Let's start with the main thing - with an increase in money in circulation. Such an increase occurred and is occurring for many reasons, including due to the serious social policy of the state, aimed at increasing the incomes of the population, whose demand is also beginning to grow. Many Russian economists see this as the main reason for the development of inflation in the country. Others take a more cautious position, not seeing a direct connection here. The second position seems to be more balanced. I will refer to one of these studies.

Indeed, its author notes, in Russia throughout the 1990s and into the new century, the growth rate of the money supply systematically exceeded the figures planned by the central bank. The range of these excesses is from 20 to 50%. In total, over the period from 1999 to 2006, the money supply increased 13.4 times. “That's inflation for you,” the supporter of the first position will say. But it's not that simple. First, along with the increase in the money supply, there has been and is an increase in the demand for money itself, and savings increase. Evidence of this is the growth of the population's money deposits in savings institutions, especially in Sberbank (this reduces the dependence between the increase in the money supply and the consumer price growth index). Secondly, there is a slowdown in the velocity of circulation of money, and a large amount of money is required to service the same commodity turnover. And, finally, the third factor that must be taken into account: the amount of money in circulation is important not in itself, but in comparison with the value of GDP - this ratio is called the monetization coefficient.

I must say that with the beginning of the reforms, when inflation exceeded all conceivable levels and the government began to pursue a tight monetary policy, the monetization coefficient was reduced to the minimum imaginable. Even at the beginning of 1999 it was only 16%. At that time, a lot was said and written about the underfunding of the economy, which became one of the reasons for the acute shortage of money among enterprises. Remember non-payment of salaries and pensions, the spread of barter exchange?

Figures for comparison: the coefficient of monetization in developed countries ranges from 60-120%, and in countries with economies in transition it is 25-30%. To date, this figure has reached 26%. As you can see, nothing catastrophic in the growth of the money supply has happened so far.

Catastrophic consequences could come if the central bank and the government did not restrain the growth of the money supply coming into the country from the sale of continuously rising oil prices on foreign markets. Among the restraining measures, first of all, we note the role of the Stabilization Fund. Its value today is almost 4 trillion rubles. For many years there have been discussions on the topic: how long should this “bag” of money be increased and isn’t it time to spend it in one way or another? Opponents of this kind of spending have two main arguments. The first. The main purpose of the fund is to create a "safety cushion" in case of a sharp drop in oil prices and a crisis situation in the country. The second argument is no less important: the danger of rampant inflation due to a sharp increase in the money supply. (The same role is played by the budget surplus, that is, the excess of government revenues over expenditures - more than 7% of GDP.)

Recently, the arguments of those who believe that it is time to use part of the accumulated funds for the development of important sectors of the economy, primarily its infrastructure, have prevailed. A decision was made in February 2008 to divide the Stabilization Fund into the Reserve Fund (in the amount of 10% of GDP) and the National Welfare Fund. According to data announced by Minister of Finance A. Kudrin, in 2007 Vnesheconombank has already received 180 billion rubles for development purposes, the Russian Corporation of Nanotechnologies - 130 billion rubles and the Housing and Utilities Reform Assistance Fund - 240 billion rubles.

But let's get back to the prices that seemed to so unexpectedly soared last fall. Examining the reasons for the rise in prices in the country, many economists point to the high costs generated by the unreasonable degree of monopolization of industries that supply food to the consumer. In other words, we are reaping the results of the extremely weak development of small and medium-sized production and the complete inactivity of the cooperatives. Here is an example: in one package of milk, only 5% is its cost; everything else is packaging, taxes, and especially high trade markups that form the profitability of trading networks. In our country it reaches 25-30% (while in Europe a rule has been introduced according to which retail profitability should not exceed 8-12%).

Finally, it is necessary to point out the very high rates of growth in prices for utilities and housing, for transport, communications and gasoline - they significantly exceeded the average rate of growth in consumer prices. For example, the cost of electricity in Russia as a whole increased by 15%, and for utilities - by 18-20%. Gas prices are also rising: in 2008, wholesale gas prices for households and industrial consumers will increase by 25%.

INFLATION AND THE FOOD PROBLEM IN RUSSIA

The so-called unbalanced food problem plays an important role in the development of the inflationary mechanism in our country. First of all, we are talking about the shortage of food products. And it is the result of the former weakness of our almost ruined agriculture, and ruined not only as a result of the reforms of the 90s. They only revealed the complete lack of competitiveness of its organizational forms - collective farms and state farms, which arose in the early 30s of the last century. It is no coincidence that during the transitional crisis the drop in production in agriculture was much more severe than in industry. There was a huge gap between supply and demand. Moreover, for some types of food it continues to increase. (For more on this, see "Science and Life" No., article by B. Rudenko "What will we be full of?".)

This gap is filled by imports, which, unfortunately, tend to increase. Here are a few figures: in recent years, the share of imports in the consumption of butter has reached 52.3%, fatty cheeses, including feta cheese, - 42.1%, sugar - 67%, fish - 30%, vegetables, fruits, berries - 32% , meat and sausage products - 40%, raw meat - 80%. In general, 35% of the products included in the diet of Russians are imported from abroad.

The meaning of imports is inconsistent. On the one hand, it compensates for the missing food and thus solves important socio-economic problems, but, on the other hand, it forces the domestic producer out of the market. Often this happens because imported products are cheaper than domestic ones. At the same time, we find ourselves captivated by price movements that occur in world markets. For example, in recent years, food prices have begun to rise everywhere (according to some reports, they have increased by 2.5 times). There was even a special term - "agflation", that is, "agrarian inflation".

What underlies the rise in prices for agricultural products? First: reduction in stocks of grains and oilseeds in many countries of the world, especially in developing countries, due to worsening weather conditions - droughts, floods, etc. Second: reduction in public stocks in major food exporting countries, combined with a gradual withdrawal of policy export subsidies. (We are talking primarily about the EU countries.) Third: an increase in food imports from the rapidly growing countries of Southeast Asia (China, India, etc.). And, finally, the fourth: the accelerated formation of the biofuel industry, which is changing the ratio between the fuel and agricultural sectors in the world economy and affecting the prices of agricultural products.

Agflation has had the strongest impact on cereals, vegetable oil and dairy products. And the growth of import prices for these products, in turn, influenced the acceleration of our domestic inflation in the autumn of 2007 (it is often called imported inflation). But it also happens this way: the measures of our government - quotas and restrictive duties aimed at curbing the import of certain types of products (primarily livestock, in order to create more favorable conditions for the development of domestic production) - actually spur price increases. The rise in the price of meat is every time the result of such a policy. “The quotas for meat and poultry are our man-made inflation,” admitted Finance Minister A. Kudrin, explaining the surge in consumer prices in 2003-2004. The ban on the import of meat from Brazil by Rosselkhoznadzor and the measures taken by Argentina to restrict its export led to the fact that in 2006 meat prices jumped by 40%. There are many such facts.

There is every reason to believe that the current inflation was not caused in itself by the increase in money in circulation. It rather compensated for the rise in prices, which was the result of higher costs. In other words, the very inflationary spiral in which cost-pull inflation and demand-pull inflation interact is at work, a spiral that is mediated by growing money circulation and which is especially difficult to stop.

WHAT TO DO?

Fighting inflation, as the experience of developed countries and our own shows, is extremely difficult. It would seem that what is simpler: freeze prices or introduce some form of regulation of certain types of prices. Unfortunately, this method can only help for a short time. The price freeze will soon have the effect of growing shortages of certain goods and exacerbate inflation even more. We have already “passed through” this, and we should not step on the same rake. Moreover, as many researchers note, a certain increase in prices for agricultural products is inevitable, since at present there is a serious disparity in prices for industrial and agricultural products, which fundamentally slows down investment in agriculture.

The option of reducing social spending, the growth of which, according to some experts, is to blame for modern inflation, is excluded. These costs are not really as high as our anti-inflationists make them out to be. They only partially compensate for the miserable life of the low-income segments of the population in Russia. If you look at the share of social spending in GDP in Russia, then in comparison with developed countries, they are very moderate (see table)

As you can see, it is by no means social spending that is to blame for the rise in prices in Russia. The reason for the current acceleration in price growth should still be sought in the field of real factors, which have already been mentioned. In support of this conclusion, I will cite the opinion of one very authoritative specialist on this issue. Speaking at the XVII Congress of the Association of Russian Banks in early 2007, the recent head of Sberbank of Russia A. Kazmin said: “Why are we fighting inflation only by limiting the money supply and thinking little about stimulating product supply? With this approach, inflation will rise despite measures to limit money demand... We may find ourselves in a situation where, due to the policy of limiting money demand, the production of goods not only for export, but also for the domestic market will become unprofitable. Accordingly, we will be even more dependent on imports, and competition in the domestic market will decrease.”

Agriculture deserves special attention from the state. The state in all developed countries in one form or another takes care of the agricultural producer. In Russia, he was left to the mercy of fate. By now, when most of the former farms - collective farms and state farms - have gone bankrupt, and the newly minted farmers have barely survived in tough market conditions, we have a rather unique economic structure. The role of the personal subsidiary farming sector has sharply increased. It produces approximately 40% of domestic agricultural products. But this, in essence, is a subsistence economy that helps the population, especially in the provinces, to survive. Another 8% is produced by our heroic farmers. The remaining 50% of production is given in equal shares by the remaining collective farms and state farms (25%) and the same amount by new agro-industrial holdings created at the expense of large industrial enterprises.

And here the program adopted by the government for the development of the agro-industrial complex (AIC) is especially important. The program includes three directions: the accelerated development of animal husbandry; stimulating the development of small forms of management; providing affordable housing for young professionals (and their families) in the countryside. The project is aimed at increasing financial support for agriculture, and not through direct public investment (when there is a big threat of direct embezzlement of money or their inappropriate or inefficient use), but on the basis of purely market methods - expanding lending and subsidizing interest rates. Preference is given to the development of the strongest and most efficient farms, which are capable of quickly raising their technical level and increasing the amount of marketable output.

It is assumed that the program will stimulate the inflow of private capital into agriculture, thanks to which a fairly solid sector of agro-industrial holdings has already been created, specializing mainly in the production of meat and dairy products.

There are many criticisms of this program. And yet the program is a very important contribution on the part of the state to solving the food problem in the country, which, in addition, has an undoubted anti-inflationary focus.

It is a naive utopia to believe that inflation can be ended once and for all, as soon as some kind of “reasonable” government is put in power. It can be reduced to a minimum, for example, to 2-3%, which the governments of most developed countries have managed to do. But this requires hard work to limit all those objective and subjective moments that put pressure on prices, pushing them up.

Another thing is also important. Even in the face of a slowdown in price growth, there is still a need for periodic indexation of income, that is, an increase in their nominal value in accordance with price growth, especially in those sectors of the economy where income is fixed and does not increase with production growth. First of all, we are talking about state employees. The government has already recognized the reality of such actions, emphasizing in a number of official speeches that the next (in February 2008) increase in pensions and incomes of state employees is a compensation for rising prices and nothing more.

The work was financially supported by the Russian State Science Foundation (RGNF) within the framework of project No. 06-02-02043a "Russian transitional economy in the mirror of world economic thought."