Michael Delyagin: "There’s No Justice in Russia Not Only in Policy but Also in Consumer Protection"

Inflation climbs up advancing rates. The authorities predicted inflation growth in the current year at a level of 6%, but prices grow even quicker. “The consumer price index in October will make 0,7-0,8%, for the period from November, 2011 to November of the current year — 6,8-6,9%”, — is said in monitoring of the Economic Development Ministry.

- Why does it happen? Influence of high prices for oil? Increase of tariffs of housing and communal services? Are there any other reasons? Whether there were any surprises, unexpected changes within a year which affected inflation?

- The key reason of inflation in Russia – universal and practically guaranteed unpunished arbitrariness of monopolies. Pozner is right: as soon as it’s possible to judge, there’s no justice in our country and it has disappeared long ago - and it concerns not only political activists, but also consumer’s rights.

Underestimated forecast of inflation for the current year was caused by transfer of increase of tariffs for natural monopolies (including housing and communal services) from January, 1 to July, 1. The reason of it is quite clear: ensuring more comfortable election and inauguration of V.V.Putin. However organizers of the transfer haven’t taken into consideration that in the second half of a year all monopolists - both natural and usual commercial operating in their shadow and covering own avidity with their appetites - will try to receive all that they haven’t received in the first half of the year.

The drought, being on its consequences comparable with 2010, led to the rise in price for grain and bread, having made its contribution to inflation acceleration.

Additional factor – general deterioration of demand-supply situation and, as soon as it’s possible to judge, decrease in the real income of the main part of the population. The less money, the more intensively monopolists try to get it for maintenance of their excess profits, the quicker prices grow. As a result they exceeded last year's level already in the middle of September.

- Whether decrease in rouble exchange rate influences inflation?

- Certainly: decrease in rouble exchange rate makes import more expensive that increases inflation. In standard economy it starts import substitution processes: domestic producers start to make analogs of import things, competition grows, prices come back to former level and share of import reduces.

It doesn’t happen in today's Russia as pitch corruption and monopolism kill possibility of production and joining the WTO on crushing terms does external competition obviously excessive.

- What does the power do to bridle inflation? Or it doesn’t do anything?

- The state aspires to reduce expenses of the budget, blocking possibilities of even simple development, without speaking about modernization, it aspires to toughening of financial policy, holding banking system on the verge of serious problems with liquidity.

This policy would be correct, if inflation were caused by superfluous monetary weight, but to constrain thus not monetary in itself inflation caused by arbitrariness of monopolies is approximately as reasonable as to cure fracture of a hand with headache pills.

- Whether it is necessary to undertake something and what exactly?

- The key step limiting inflation - ensuring full transparency of structure of prices of every company suspected of abuse of monopoly position.

Following example of Germany the antimonopoly service at sharp fluctuation of a price should acquire the right to return it at first to its former level and only then to investigate validity of its change, considering refusal to sell product at the appointed price as criminal offense. After all antimonopoly investigation can last for years, during this period an irreplaceable damage could be made to economy, therefore protection against such damage could have advancing character.

The Russian producers should be provided with free access to the markets of cities, if necessary – using power structures and carrying out special operations to clear the ways for competition as in a number of cases organized crime is the monopolist, especially in trade.

Consumers of services and goods of natural monopolies should have full freedom in connection to their networks and receiving these services and goods at fair prices everywhere where there is the slightest technical possibility.

It is necessary to eliminate mass use of intellectual property rights for cover of monopoly position abuse.

- What are consequences of such growth of inflation for citizens? What do you advice?

- Even taking into account that real inflation is approximately twice as higher, than official one, ordinary consumers in the whole won’t feel deviation from look-ahead level. Exceptions – most "sensitive" gasoline, grain, housing and communal services.

Advises are simple: more economical consumer behavior, break-in of new skills demanded by the market or moving to one of the countries which authorities fulfill their duties on protection of consumers against arbitrariness of monopolies. Though emigration is a heavy burden and the majority of our compatriots as we see prefers to suffer barefaced and universal robbery.

- What’s your next year inflation forecast?

- Acceleration of inflation will proceed, but its official level won't manage to reach 10 percent threshold.

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