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No More Cheap Lunch in CIS
The jump in food prices in the CIS has been significant and food prices in Russia are rising much faster than world rates as a whole. Consequently, annual inflation in most of the CIS states will return to the double digits again this year. Those are among the conclusions reached by Oksana Osipova in the latest issue of the Development Center monthly review.
Average inflation in the CIS in the third quarter was 8.8 percent annually, and it has already reached 11.6 percent this quarter. The rise is most extreme in the poorer countries – Tajikistan, Kyrgyzstan and Moldova – where food occupies a greater part of consumer expenses.
The CIS countries can be divided into three groups. In the first group is Tajikistan, Belarus and Armenia. There food prices are rising more lowly than in the world as a whole. Those are the countries with the greatest amount of state price regulation. In the second group, Kazakhstan, Kyrgyzstan, Ukraine and Azerbaijan, domestic prices have exceed world prices slightly in the course of the last two years. It seems logical to suggest that a process of equalization of prices between foreign and domestic prices is going on there, since the difference in absolute prices was significant until recently.
Russia is the third group. Here, food prices are rising twice as fast as in the world. That is also evidence of equalizing of prices, as well as the consequence of excessive market regulation. The Development Center notes that that is especially noticeable in meat and dairy product prices in Russia, which have grown especially fast compared to the rest of the world.
www.kommersant.com
All the Article in Russian as of Dec. 10, 2007
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