The government is the main driver of the inflation

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April 22, 2016 18:00

Devaluation and persistent issue of money continue unwinding the inflationary spiral. Food prices are the main drivers now. Rising prices and costs against the backdrop of an undervalued national currency could put Belarusian producers out of business.

On 20 September the selling prices for bread, milk and meat were increased again in Belarus. The Ministry of Economy Decree No 153 of 19 September 2011 provides for 10% increase of the selling prices for bread and bakery products, milk and yogurt, sour cream, cottage cheese and 20% for beef and pork.

Also cigarettes prices have been increased up to 50%.

Agriculture Ministry of Belarus increased the minimum prices for agricultural products (farming), purchased for state needs by 55-67%. In particular, the purchasing prices for milk have been increased by 55%, for pork by 62% of cattle by 67%.

Comment

Devaluation and persistent issue of money continue unwinding the inflationary spiral. Food products are under major attack now. The Economy Ministry is consistently trying to raise the prices of final products to align the price disparity with the neighbors in order for meat and dairy plants to gain minimal profits (regardless of the recent price increases plants remain unprofitable), via reimbursing the rising costs to producers.

Agriculture Ministry of Belarus increased the minimum prices for agricultural products (farming), purchased for state needs by 55-67%. In particular, the purchasing prices for milk have been increased by 55%, for pork by 62% of cattle by 67%.

However, the Ministry of Agriculture also increases the purchase price to offset the increased costs to their agricultural producers. In a while, the Ministry of Economy will need to increase the final prices for basic foodstuffs again. The rise in prices and costs against the backdrop of an undervalued currency could put Belarusian producers out of business and the food industry could become an importer. While imports from the EU countries could be countered by non-tariff measures, it would not be feasible with regard to imports from Russia. Moreover, rising prices for basic foods will cause an immediate demand to raise wages and pensions, fueling inflation.

 

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Belarusian and Ukrainian Defence Ministries entangle in confrontation spiral
October 02, 2017 11:57
Фото: RFRM

Over the past year, military-political relations between Minsk and Kyiv have become complicated. Due to their high inertia and peculiarities, this downward trend would be extremely difficult to overcome.

The root cause of the crisis is the absence of a common political agenda in the Belarusian-Ukrainian relations. Minsk is looking for a market for Belarusian exports in Ukraine and offers its services as a negotiation platform for the settlement of the Russo-Ukrainian war, thereby hoping to avoid political issues in the dialogue with Kiev. Meanwhile, Ukraine is hoping for political support from Minsk in the confrontation with Moscow. In addition, Ukraine’s integration with NATO presupposes her common position with the Alliance in relation to Belarus. The NATO leadership regards the Belarusian Armed Forces as an integral part of the Russian military machine in the western strategic front (the Baltic states and Poland). In addition, the ongoing military reform in Ukraine envisages a reduction in the number of generals and the domestic political struggle makes some Ukrainian top military leaders targets in politically motivated attacks.

Hence, the criticism of Belarus coming from Ukrainian military leadership is dictated primarily by internal and external political considerations, as well as by the need to protect the interests of generals, and only then by facts.

For instance, initially, the Ukrainian military leadership made statements about 100,000 Russian servicemen allegedly taking part in the Russo-Belarusian military drill West-2017. Then the exercises were labelled quazi-open and military observers from Ukraine refused to provide their assessment, which caused a negative reaction in Minsk. Further, without citing specific facts, it was stated that Russia was building up its military presence in Belarus.

Apparently, the Belarusian and Ukrainian Defence Ministries have entangled in a confrontational spiral (on the level of rhetoric). Moreover, only a small part of the overly hidden process has been disclosed. That said, third states are very likely to take advantage of the situation (or have already done so). This is not only about Russia.

The Belarusian Defence Ministry officials are restrained in assessing their Ukrainian counterparts. However, such a restraint is not enough. Current military-political relations between Belarus and Ukraine are unlikely to stabilise without the intervention of both presidents.