When asked what inflation is,answer so Inflation is an increase in prices for goods and services, which, as a rule, are no longer falling. As a result of inflation, the same set of goods and services will have a higher cash price, and a smaller amount can be purchased for the same amount of money. All this leads to such an undesirable phenomenon as the depreciation of money, and almost always causes a negative public reaction.
In Russia, inflation was also significant, however, it dropped sharply in the last 2 years. According to Rosstat, inflation in Russia in 2017 was 2.5-2.7%.
Inflation in simple terms
The simplest definition of what isinflation is the devaluation of the buyer's money. For example, if earlier you could buy 2 packs of butter for 100 rubles, now you can buy only one for the same amount. Due to inflation, your money has become two times less valuable. A negative factor in this is that the monetary value of wages and pensions for a long time can remain unchanged. This automatically leads to the impoverishment of citizens.
What is money inflation in the economy?
In conditions of uncontrolled market relationsinflation almost always manifests itself in its classical form - in the form of direct price increases. When federal or local authorities intervene in pricing (combined with negative trends in the economy), there may be a shortage and / or decline in product quality without a noticeable increase in prices. In this case, talk about the phenomenon of hidden or suppressed inflation.
Not any price increase is inflation.For example, seasonal (cyclical) food price increases, various price fluctuations, including short-term price shocks, are not considered inflation. They talk about it in the event that prices grow steadily, and this growth applies to most goods and services.
What is deflation?
В противоположность инфляции, снижение The weighted average price level is called deflation. It is observed much less frequently than inflation, and on a smaller scale. Only very few countries can boast of such a price trend. Among developed countries, deflation is characteristic of Japan.
Varieties of inflation
The intensity of the process are the following types of inflation:
- Creeping inflation, in which prices do not risemore than 10 percent a year. Such a phenomenon in the world is considered normal and is observed in many countries. Its appearance is often associated with additional inflows of money supply into the financial circulation. This leads to such positive shifts as the acceleration of payment turnover, the growth of investment activity, the increase in production and the reduction of the credit load on enterprises. The average percentage of inflation in the EU in recent years ranged from 3 to 3.5%. However, with improper pricing regulation, there is a risk of inflation becoming more aggressive.
- Galloping inflation is characterized by a one-yearprice increases in the range of 10-50%. This situation is extremely unfavorable for the economy and requires the adoption of deterrent measures. This level of inflation is often observed in developing countries.
- Hyperinflation - a rise in prices from several tens to tens of thousands of percent per year. Associated with the excess release of banknotes by the state. It is characteristic for acute crisis periods.
If inflation persists for a long timetime, it is called chronic inflation. If at the same time there is a simultaneous drop in production, then this type is called stagflation. In the case of a sharp increase in prices only for food products they talk about such a form as agflation.
By the nature of the manifestations emit open andhidden inflation. Open - this is a long visible increase in prices. Suppressed (or hidden) - this is such inflation, in which prices do not grow, but there is a shortage of goods in stores. Most often this is due to government intervention. Due to the moderate price, the demand for products is growing, which may cause a shortage, due to high purchasing power, but at the same time relatively low supply. This situation was observed in the USSR. It is called demand inflation.
Manufacturers can also go for tricks andreduce the cost of production of its products, which will affect the deterioration of its quality. At the same time, its prices may remain unchanged or grow at a slow pace. A similar situation is observed in modern Russia. In the USSR, this was not possible due to strict quality control of goods and the requirements of compliance with GOST standards, and therefore demand inflation developed.
Possible consequences of inflation
- The depreciation of cash reserves and securities.
- Decrease in accuracy and deviation from reality of indicators of GDP, profitability, etc.
- Devaluation of the national currency of the state.
How is the inflation rate determined
For indexing wages, pensions and socialpayments should take into account the coefficient that gives adjustments for inflation. The most frequent method for determining the value of the inflation coefficient is the consumer price index, which is based on a certain base period. Such indices are published by the Federal State Statistics Service. To determine it, use the cost of the consumer basket. But other methods are used, such as:
- Producer Price Index. Determines the cost of production, excluding taxes.
- The dynamics of the national currency relative to the base, more stable (dollar).
- The index of living expenses. Includes definition of income and expenses.
- GDP deflator. It determines the price dynamics for a group of the same goods.
The price index of assets, which includes stocks, real estate and more. The rise in asset prices is more intense than the rise in commodity prices. As a result, those who own them become richer.
Anti-inflationary policy
Anti-inflationary policy is a set of measures taken by the federal authorities aimed at regulating price increases. This policy is divided into the following types:
- Deflationary policy.It is aimed primarily at reducing the circulating money supply. To do this, use the tax, credit mechanism, reduce government spending. At the same time, a slowdown in economic growth is possible.
- Control measures for both prices and wages, limiting their upper limits. However, this may cause discontent in some sections of society (oligarchs, officials, deputies, etc.).
- Sometimes they resort to external loans. This policy was carried out in the 90s, which led to a sharp increase in state. debt and economic crisis.
- Measures to compensate for the effects of inflation in the form of annual indexation of wages and pensions. This policy is trying to pursue at the present time.
- Stimulating economic growth and production is the most difficult, but also the most radical method of price stabilization.
Inflation in Russia according to Rosstat
According to official data of Rosstat, inflation in 2017year was only 2.5, and according to other data - 2.7%, which is the minimum in the modern history of the country. This level of inflation is quite close to the values typical for developed countries. In 2016, inflation was 5.4%, in 2015 - 12.9%. In 2018, according to forecasts, inflation will be 8.7%. Its decline in the last 2 years could be due to the restoration of world prices for raw materials, the policy of the Central Bank, and, in part, with the policy of import substitution.
Is Rosstat data underestimated?
Most Russian citizens rateinflation as higher than according to official statistics. According to the participants of the “InFOMA” survey, this could be due to the impact of several negative factors:
- The decline in real incomes of the population, observedfrom 2014 to 2018 The maximum decrease was observed in 2016. True, the scale of this, according to Rosstat, was relatively small: by 0.7 in 2014, by 3.2 in 2015, by 5.9 in 2016 and by 1.4 in 2017. However, these are average numbers. For more vulnerable categories of citizens, of course, it was more. When income decreases, a person becomes more sensitive to price increases.
- The second reason was the increased tax burden.in recent years. There are more toll roads, parking lots, fees. Someone suffered from this stronger, someone - less. For some groups of citizens, a resort fee may become a negative factor in the holiday season. Also impacted the depreciation of the ruble. After a long lull, the ruble exchange rate sank heavily. As a result, everything that was sold for dollars rose sharply. This also created a feeling of rapid price increases.
- Another reason could be unevenprice increase. They not only did not increase for some goods and services, but even dropped during the crisis. But many drugs (especially imported) and products have risen in price quite strongly. As a result, it has become more difficult for people to buy them. It turns out that inflation has hit more on the most significant consumer goods and transportation services for the majority of citizens, and this created a feeling of total and strong price increases.
Much also depends on the adopted methodology for calculating the value of inflation.
How did hidden inflation manifest itself?
The rise in prices for products and goods is onlythe visible part of the iceberg, which symbolizes the current situation with inflation in the country. The decline in the quality of goods and services is an important negative trend in recent years. For example, buyers note a decrease in the weight of the same products (bread, milk, etc.), deterioration of taste, active use of cheap fats instead of dairy, greater dilution of products with water, etc. All this indicates a decrease in food the values and health benefits of the same product mix in recent years.
Poor quality is not only characteristic ofproducts, but also for many consumer goods. The quality of medical services has also deteriorated. Thus, actual inflation was significantly higher than the nominal price increase, and its true scale is difficult to estimate, and may depend on a particular region.
Conclusion
Thus, official inflation in Russiais relatively low, but uneven over years and types of products. It was most significant in 2015. In 2018, inflation may turn out to be higher due to the weakening of regulation by the Central Bank. An important role in shaping the current situation in Russia is played by the so-called hidden inflation. All this, together with other negative trends, led to a sharp deterioration in the quality of life of citizens. The question of what inflation is, the article gave a detailed answer.
