May 27, 2022
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“By the time indexation reaches the wallet, inflation will already eat it”

"By the time indexation reaches the wallet, inflation will already eat it"

Photo: Vladimir Smirnov/TASS

President of Russia Vladimir Putin approved the indexation of pensions for non-working pensioners, the minimum wage and the living wage by 10%. The meeting of the State Council at which this decision was made was broadcast by the Russia 24 TV channel.

Pensions and the cost of living will be increased as early as June 1. As a result, the cost of living on average in the country will reach almost 13 thousand rubles. The minimum wage will be raised a month later – from July 1 – to an average of 15,278 rubles. For comparison: in 2021, the minimum wage was increased by 5.5% and the subsistence minimum by 3.7% compared to the previous year.

Now the minimum wage is 13,890 rubles, the living wage is 12,654 rubles. in Russia as a whole, the average pension is almost 19 thousand rubles. In the context of soaring prices for the usual grocery basket, this, frankly, is not a lot.

In fact, the spasmodic growth of inflation and the pandemonium with prices for almost everything became the main reason that raised the question of the need for unscheduled indexation of social benefits. Their increase should only support the least well-to-do part of the population and prevent their purchasing power from sinking. Because the less money a person has, the more he cuts his expenses. And this immediately reduces the level of consumption of both goods and services. True, the expected 10% increase is not particularly clear.

According to Rosstat, from May 7 to 13, inflation slowed to 0.05% after 0.12%, which were recorded in the first week of May. At the same time, this process affects the price tags in stores, frankly, almost imperceptibly. Here is the peak from February 26 to March 4, when the consumer price index in weekly terms reached 2.22%, we noticed right away. Then prices rose almost every day. In annual terms, inflation as of May 13 was 17.7%. And at the end of the year, according to the forecast of the Ministry of Economic Development, it will slightly decrease and amount to approximately 17.5%.

However, there are more optimistic forecasts. So Assistant to the President for Economics Maxim Oreshkin assumes that consumer price growth in 2022 will not exceed 15%. “In the coming weeks, Russia will enter a sustainable deflationary trend,” he said on May 19. But this does not make it any easier: in the covid 2021, when the economy was bursting at the seams, annual inflation reached “only” 8.39%.

Additional indexation of pensions and salaries of state employees, if it is 10%, will cost the federal budget about 0.3% of GDP, which, according to the forecasts of the Ministry of Economic Development, will reach 140 trillion rubles in 2022. in nominal terms. At the same time, in the first quarter, the budget surplus was a record – 1.15 trillion. rubles. But in April there was already a deficit of 262 billion rubles.

So, in connection with the expectation of the benefits promised by the state, a natural question arises: will the money that will be allocated be enough to really support those in need?

Judging by the comments on social networks, citizens strongly doubt that life will become easier:

“Unfortunately, this does not compensate for the colossal inflation”;

“You can buy 130 kg of sugar for this new minimum wage, when you could buy 240 kg for the old one. That’s all the increase “;

“Products have risen in price by half, medicines by one and a half times – this is obvious. True, the tariffs for housing and communal services have not yet increased. Will grow up soon”;

“On average, we can say that for the poor and middle strata, whose most of their income is spent on food, transport and medicines, inflation is somewhere around 50%. And while indexation reaches real payments, inflation will already eat it up. This has already happened in the 90s”;

“Our traders adjust the price tags to match the global ones. So these penny allowances are like dead poultices.”

Of course, there are also comments in the style of “thanks to the state for caring”, but they are drowned in a sea of ​​sarcasm and bitterness.

Economist Valentin Katasonov sees no reason to be happy either.

– Official estimates of inflation rates are always underestimated. Real inflation is, I think, at the level of 20 or even 30%. So 10% is clearly not enough to compensate.

“SP”: Is it possible to allocate more money for social support? For example, to increase the cost of living by at least 20%?

– Even the proposed 10% will not be so easy to allocate. It is not clear where our money comes from today. Central Bank reserves in the amount of $300 million were frozen. This is about half of all assets of the Central Bank. The lion’s share of rubles entered the market when the Central Bank bought foreign currency. But now he does not make such purchases. Rubles could come from ruble lending in Russian banks. But, as far as I know, lending is not working now, because the key rate is prohibitively high. At the same time, the country was flooded with foreign currency, but it cannot be used, it is toxic, it cannot be converted into the national currency. In addition, rubles are not printed now, because interest rates are outrageous. So it is not clear how the Central Bank will get out of the current impasse. Where will the rubles come from?

Ruslan Khasbulatov considers the expected increase simply mocking, although, in his opinion, there is money in the country.

“It seems that the ruling class deliberately keeps the population in poverty. Even 15 years ago we had to live at the level of France. Russia receives billions for oil and gas. This money should be invested in the development of production, education, and medicine. And we again began to buy gold, which lies somewhere without practical use. This is the most illiquid commodity.

“SP”: – What measures should be taken to correct the situation?

– There were recently Plekhanov readings, I made a big report there. He proposed a whole program to the government, which would allow the payment of housing and communal services to be halved, the price of gasoline also to be halved, the minimum wage and pensions to be brought up to 25-30 thousand. To do this, it is necessary to revive the law on free trade, which literally saved our country in 1992 when Yeltsin released prices. After all, in fact, it was the NEP law, which allowed small entrepreneurs to produce products without any permits. By the way, Stalin canceled it last. This law would allow the production of various small things, like nails. And then the speaker of the Federation Council Valentina Matvienko surprised that they are imported! You look, and import substitution would finally work.

As for the ten percent increase, this, unfortunately, is a laughing matter for chickens. Do representatives of our government even know the country in which they live? Do you understand what people need? And, you know, when you start thinking about it, it becomes somehow alarming for our future.

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