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Inflation Fades - together with Economy

Inflation Fades - together with Economy
Delyagin Michael 14.07.2009

Inflation comes to naught: from April 0,7% it decreased to May 0.6%, in first half of June it made 0.3% that is twice below of the same parameter of last year. From the beginning of year up to June, 15th inflation made 7,1% in comparison with 8,3% of last year.

Deflator of gross national product (general level of rise in prices in economy) in the I quarter of 2009 made 5,8%. It means crash of the official forecast (according to which budget-2009 was made up) which proceeded from decrease of overall price level in 2009 (annual deflator should make nearby - 1,0%).

However its absolute level is insignificant and up to a new financial pump of economy (expected in the end of the year) deflator of gross national product will grow poorly and will exceed the level of official inflation just a little.

Prices in industries which slid from September to January as much as more than a quarter - by 27.5%, then started growing (and regained from February to May 11,4%). But their growth has already come to naught: from 5,1% in February to 2,9 and 2,4% in March and April to 0,6% in May.

May prices in industry is by 6,5% below last year ones and their growth for January-May - by 7,7% - is below than last year (11,5%) in one and a half time.

Tariffs for cargo transportation for January-May grew only by 2,5% against 19.8% of last year.

The basic locomotive of rise in prices in industry - extraction of fuel and energy minerals. Under their influence prices of mining industry grew in March by 19.9%, in April by 15.3% but in May - only by 5,3%.

Manufacturing industry crushed by absence of demand and high costs cannot rise prices. Their symbolical growth by 0,1% in March and by 0,2% in April was replaced by decrease by 0,5% in May. For January-May they grew only by 1.0% in comparison with last year 12,2%.

Crisis did not brake rise in prices of only natural monopolies. In manufacture and distribution of the electric power, gas and water they grew from the beginning of the year even more than in last year - by 18,1 and 17,6% accordingly.

Thus, absence of demand "knocked down" arbitrariness of monopolies in all spheres but for natural monopolies. Absence of the demand, in its turn, is caused by unprecedentedly rigid financial policy of the state. For January-April money supply for the first time from before default 1998 didn't grow, it even reduced - by record 8,6% (in 1998 reduction made only 0,4%)!

Such policy destroys economy much more effectively, than inflation. Industrial recession has gone deep from 14,3% in the I quarter to 16,9% in April and 17,1% in May. Agricultural manufacture growth has come to naught: from 2,1% in the I quarter it reduced to 0,5% in April and symbolical 0,2% in May. Investment recession from 15,0% in the I quarter and 16,2% in April went deep to 23,1% in May.

However, real incomes of the population for January-May decreased only by 0,6%. Unfortunately the reason is simple: official statistics considers roubles our current incomes received by us at the expense of transfer of dollar savings into rouble (because of rouble strengthening) and even during "guzzling".

Therefore it is better to judge about financial position of the population from retail goods turnover. After January growth of 4,5% (because of "crisis" sales) in February it decreased by 1.4%, in March - by 3.0%, in April - by 4.5% and in May - already by 5,6%.

Economy troubles - budget troubles.

Own incomes of regions in May, 2009 fell in comparison with not too happy April by 42% and in comparison with May, 2008 - by 23%. Even in Moscow suburbs governor Gromov after solemn promises not to reduce social support "cut off" own extra charges to state employees and in rich Moscow pensioners "monetized" benefits for medicines didn't received 61 roubles.

Incomes of the federal budget fell "only" by 14% - from 488,8 billion rbl. in April to minimum for all year 419,1 billion in May. "Not oil and gas" incomes decreased almost by a quarter - from 320,1 to 243,2 billion rbl., that's also an annual minimum.

However, expenses were reduced even more - almost by 30%: from 810,8 billion rbl. in April to 578,0 billion in May. It allowed to reduce deficiency more than twice: from 322,0 billion rbl. in April to 158,9 billion in May (or from 10,7 to 5,3% of gross national product).

Its payment, as well as earlier, followed at the account of reduction of not used rests of means of the federal budget. The general reduction of those rests for 4 months made 1,9 bln. rbl.: 275,1 billion rbl. in February, 502.8 billion in March, 654.3 - in April and 465,8 billion rbl. in May; as a result not used rests on accounts were reduced from 8,3 bln. rbl. for February, 1st to 6,4 bln. for May, 1st, 2009). Only Reserve Fund was reduced for February-May on 36,39 billion dollars - to 100,95 billion.

Besides deficiency payment not used rests of means of the federal budget go on payment of negative currency difference caused by rouble strengthening (in May - 208,4 billion rbl.) and on support of bank system which received 155,0 billion rbl. in April and 94,9 billion in May in the form of budgetary deposits.

Inevitably accruing budgetary crisis, as well as in before-default 1998, pushes the state on toughening of tax pressure. One shouldn't forget that after default of 1998 freight trains didn't run for three weeks in the country. The reason was simple: banks did not carry out payments including tax payments and tax specialists considered every economic activity which didn't bring money to the budget as corpus delicti. Transportation by rail, unlike other types of activity, is impossible to hide.

After all eagerness of tax specialists already in "corpulent" for bureaucracy and oligarchy "zero" years acquired the forms perceived by Russians as true tax terror!

Today its new coil - "pre-judicial write-off" of tax debts from citizens of Russia is being under preparation - the bill was brought to the State Duma not by someone but by the Supreme Court, in general, not inclined to abusing of the right of legislative initiative.

The essence is simple: to grant tax specialists with the right to write off the debts from bank accounts of citizens without court and in their absence - to take away cash or property.

When it will be accepted by parliament and signed by president Medvedev (the State Duma will consider the bill in autumn and though representatives of "Edinaya Russia" today show discontent, their opinion can not be taken into account), computer failure or error of the tax inspector will mean real losses for Russians: they will lose money automatically and then spend years in courts (if they will still have money for legal cost) substantiating. Thus citizens proved their being right will stay as "personal enemies" of omnipotent tax service (that, as it is possible to understand, creates threat of already conscious "errors" in relation to them in the future). They will receive back their money already "bite" by inflation and possibly - devaluation.

Besides, the Russian judicial system makes impression of completely free from everything (including laws), except administrative instructions "from above". It can quite accept an epithet "indisputable" which the Supreme Court mentioned in explanatory note to the bill to affairs under claims of tax departments as a direct guideline. Then citizens of Russia, possibly, would not have possibility to rescue their means withdrawn from them by tax specialists even in case of a typing error in courts.

As soon as this wonderful invention of the Russian bureaucracy will become law, educated part of Russians will understand that its contributions in the Russian banks can be at any moment written off by tax specialists on the most ridiculous basis and their rescue if it in general will be possible will demand huge forces and time.

Withdrawn of money from the Russian banks will become natural reaction: either abroad, or safety deposit box, or "under mattress" - which will without any global and internal crises be capable to destroy bank system of Russia standing in fragile balance before autumn destabilization.

Really: who needs a deposit if it can be taken away at any moment - at that absolutely lawfully?

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