Think tank: inflationary pressure eases, risk of continued galloping inflation high

November 9, BPN. Although inflationary pressure eased in Q3, the risk of continued galloping inflation is high, Belarusian think tank BEROC said in a review.

At the same time, it said that tight price controls significantly complicate forecasting and contribute to uncertainty.

The baseline scenario is that the ban on price hikes will be strictly followed only in the short-term (several months to six months). Subsequently, given possible shortages of goods and financial difficulties of companies and entrepreneurs, it is quite possible that the law will not be strictly enforced.

In this case, inflation may slow to 14-16 percent by the end of 2022.

The exchange rate factor, the think tank said, will continue to create inflationary pressures if the Belarusian rubel depreciates against the Russian ruble, but the factor may nit have a string impact in the future. At the same time the disinflationary impact of weaker domestic demand will remain.

BEROC said that inflation can slow down to 7-11 percent in 2023.

On October 6, Alaksandr Łukašenka signed a directive to freeze consumer prices. The government, the State Control Committee and the Prosecutor General’s Office adopted follow-up regulations that carry punishment for managers responsible for price hikes without official permission.

The government by its October 19 directive put price caps on 370 items. On October 27, some goods were dropped from the list.

The National Statistical Committee said consumer prices rose by 0.9 percent in September from August’s level. Inflation was 17.4 percent year on year.