{"id":146839,"date":"2025-07-15T13:53:52","date_gmt":"2025-07-15T10:53:52","guid":{"rendered":"https:\/\/pozirk.online\/en\/longreads\/146839\/"},"modified":"2026-04-15T13:35:32","modified_gmt":"2026-04-15T13:35:32","slug":"inflation-officials-still-searching-for-a-magic-formula","status":"publish","type":"longreads","link":"https:\/\/pozirk.online\/en\/longreads\/146839\/","title":{"rendered":"Inflation: officials still searching for a magic formula"},"content":{"rendered":"\n

As inflation accelerates, Alaksandar \u0141uka\u0161enka is once again looking for someone to blame. He has warned his officials to prepare for a scolding.<\/strong><\/p>\n\n\n\n

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\n (Daryna Mitrakova\/nesvizh-news.by)<\/span>\n <\/div>\n <\/figcaption>\n<\/figure>\n\n\n\n

Relaxation of price controls<\/h2>\n\n\n\n

Since taking office in March, Prime Minister Alaksandar Tur\u010dyn has overseen a significant rollback of price controls. In April, the government shortened the list of regulated goods, removing items such as sausages, milk cream, cakes, spring onions, tables, stools, carpets and others.<\/p>\n\n\n\n

This policy shift contributed to inflation rising to 7.4 percent in the 12 months to June, surpassing the cabinet\u2019s target of 5 percent.<\/p>\n\n\n\n

Meanwhile, the National Bank of Belarus (NBB), under new leadership since former Prime Minister Raman Ha\u0142o\u016d\u010danka assumed the role of governor earlier this year, has adopted a looser monetary policy.<\/p>\n\n\n\n

The shift in focus from macroeconomic stability to economic growth could destabilize the economy, erode institutional resilience and increase vulnerability to external shocks, warned Anatol Charyton\u010dyk, a senior researcher at the BEROC think tank, in mid-July.<\/p>\n\n\n\n

He noted that the NBB\u2019s policy is becoming increasingly lenient and tolerant of inflationary risks, raising concerns about possible overheating.<\/p>\n\n\n\n

Elusive “fair price”<\/h2>\n\n\n\n

Following Russia\u2019s full-scale invasion of Ukraine in February 2022, \u0141uka\u0161enka imposed a blanket freeze on prices. However, his enthusiasm for direct controls appears to have cooled. In 2024, he tasked the cabinet with devising a so-called fair pricing formula.<\/p>\n\n\n\n

He elaborated on the idea during a July 14 meeting with Aleksandr Beglov, governor of Russia\u2019s Saint Petersburg. Frustrated with the lack of progress, he said: \u201cWhy can\u2019t they take a typical enterprise where everyone is happy down the chain and set this threshold: [everyone else must] work like they do.\u201d<\/p>\n\n\n\n

\u0141uka\u0161enka\u2019s fixation on price controls stems from his skepticism toward free-market principles.<\/p>\n\n\n\n

\u201cThere is no and never has been a free market,\u201d he claimed in May 2024. \u201cThis concept has been imposed by the United States. Their economy is held up by papers.\u201d<\/p>\n\n\n\n

A strong-arm ruler, \u0141uka\u0161enka relies on compulsion, discipline, fear, punishment, and populist rhetoric to enforce his policies.<\/p>\n\n\n\n

Belarus lags behind neighbors<\/h2>\n\n\n\n

Over the past decade, Belarus has experienced significantly slower GDP per capita growth than its neighbors. According to BEROC, Belarus averaged just 0.9 percent growth, compared to 2.9 percent in Latvia, 3.3 percent in Lithuania, and 4 percent in Poland.<\/p>\n\n\n\n

At the same time, those neighboring EU countries maintained significantly lower inflation rates\u2014without resorting to sweeping price controls or centrally imposed pricing formulas.<\/p>\n\n\n\n

A long, desperate struggle<\/h2>\n\n\n\n

\u0141uka\u0161enka has been fighting to control prices since he first took office in 1994. That November, he ordered his cabinet to \u201croll back prices.\u201d<\/p>\n\n\n\n

While \u0141uka\u0161enka vacationed in Sochi, Prime Minister Michai\u0142 \u010cyhir\u2019s cabinet raised food prices in an attempt to \u201cstop economic chaos and save producers.\u201d But the Council of Ministers, under pressure from the president, soon reversed the decision, reducing the prices of bread, milk, and other staples. The move did little to contain inflation: from 1994 to 2000, consumer prices in Belarus rose by 520 percent, according to calculations by economist Jarasla\u016d Raman\u010duk.<\/p>\n\n\n\n

Over the years, \u0141uka\u0161enka has launched numerous crusades against inflation. Most recently, in October 2022, he issued a decree banning retailers, manufacturers and wholesalers from raising prices.<\/p>\n\n\n\n

These strict price controls helped reduce inflation from 12.8 percent in 2022 to 5.8 percent in 2023 and 5.2 percent in 2024. However, the policy came at a cost: retailers saw sharp declines in profitability, and some were driven into bankruptcy.<\/p>\n\n\n\n

Earlier this year, \u0141uka\u0161enka linked potato shortages in grocery stores to retailers\u2019 dissatisfaction with the controls.<\/p>\n\n\n\n

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