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#2 - JRL 7269
RosBusinessConsulting
July 30, 2003
Russians tired of inflation and rising prices

In his address to the Federation Council, Russian President Vladimir Putin defined three priorities for the government: to double the GDP, reform the army and fight poverty. As in the early 1990s, most Russians demand that the authorities curb inflation, and they even suggest that price control should be re-introduced, the Izvestia newspaper reports, quoting the results of a survey carried out by the All-Russian Centre for the Study of Public Opinion (VTsIOM). The government is not bothered by price rises, and it focuses on the goal of doubling the GDP. Meanwhile, the number of citizens concerned with price rises has increased over the past year.

In July 2002, 44 percent of those polled by VTsIOM expected the government to take measures to curb inflation. And this year, 47 percent of the respondents said that the fight with inflation was the governments main task. Moreover, 36 percent said state control over prices should be resumed, and 34 percent suggested that wages, pensions and bank deposits should be indexed according to price rises. Only 9 percent called business promotion one of the governments key goals, while 26 percent believe the government should increase its support for the agricultural sector.

Perhaps, the list of priorities might be different if VTsIOM officials had chosen other respondents or included goals of doubling the GDP and diversifying the economy in their questionnaires, the newspaper reports. And it is no surprise that citizens and authorities have different perceptions about peoples welfare, the Izvestia notes.

But what is important is that people still call price control one of the main goals of the authorities, while the government reports lower inflation rates. Inflation was 18.6 percent in 2001 and 15.1 percent in 2002, and it is projected at 12 percent for this year, although independent economists say inflation will be about 14 percent. Whether inflation will be 12 or 14 percent, people will not feel the difference, because inflation they face has nothing to do with the aggregated indicator reported by the State Statistics Committee.

According to official reports, monthly inflation decreased from 2.4 percent in January 2003 to 0.8 in May 2003. Inflation was 7.9 percent in the first half of the year. Meanwhile, consumer services became 15.6 percent more expensive, but this is an aggregated indicator, too. Among consumer services taken into account by the State Statistics Committee are hairdressers services, tickets to museums, public transport fares and electricity bills. Prices for haircuts and museum tickets are unlikely to have changed significantly over the reporting period, while heating and electricity tariffs rose by 20-40 percent in a number of Russian regions. Unlike the services of hairdressers and museum guides, it is difficult to abandon the housing and communal services, and, on average, Russian people spend about 15 percent of their income to pay for them, the newspaper says.

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