The topic of inflationary processes in the domestic economy and measures taken by the authorities to curb them has always been quite relevant and invariably controversial. Even statistics on this topic themselves invariably cause the most heated debates and contradictory judgments, not to mention assessments of the real effectiveness of the actions of one or another government. Where is the truth?
The term “inflation” (from the Latin inflatio - “bloating”) has become a part of the lexicon of financiers around the world since the beginning of the 50th century. It means an increase in the amount of paper money in circulation in the state. Multiplying, banknotes are depreciating, which inevitably leads to higher prices, a drop in the standard of living of the population, and at the macroeconomic level - to the disruption of the entire credit and financial system of the state. Hyperinflation (according to IMF estimates, this is considered to be a monthly rise in prices of XNUMX% or more) can completely kill the economy, leading to its collapse.
Unfortunately, our country has experienced such a disaster more than once over the past three decades. The inflation that "started" in 1991 from over 160%, a year later, stepped over the level of 2,5 thousand percent! In the next few years, its indicator was measured, albeit not so shocking, but still frightening numbers: 840% in 1993, 214% in 1994 ... Relative stabilization was achieved in 1996, when the inflation rate was only 21%. This was preceded by two monetary reforms (1991 and 1993), which were clearly of a confiscatory nature.
True, all these measures, as well as the 1998 denomination (which, in fact, was another monetary reform), did not help much against the background of the default that hit Russia in the same year. Unsurprisingly, the inflation rate skyrocketed to nearly 85% immediately. In subsequent years, it declined: first by half, then fourfold, but since 9 we can speak of a real stabilization of the country's financial system, when inflation indicators began to keep within the strict “limits” of 12-2003%. Further, this indicator was fixed at the level of 6-8%.
Some growth in inflation in Russia, quite predictably, occurred in 2014-2015, but by now it has again been reduced to 3-5% per year. At least, Rosstat data show just that. Some domestic experts argue that these figures do not correspond in any way to the real growth of prices and tariffs, citing various reasons and proposing their own calculation methods: in accordance with exchange rate fluctuations or changes in the value of the “consumer basket”. However, the official data is still the official data, and I will proceed from them.
What methods were used to carry out the anti-inflationary policy all this time? I have already mentioned about monetary reforms that sharply reduced the physical quantity of circulating banknotes. However, in the opinion of the absolute majority of economists (with the exception of those who adhere to radically monetarist views), the causes of this disaster are far from being exhausted by the mere overabundance of banknotes in circulation.
As a rule, the state is forced to "turn on the printing press", throwing into the economy more and more portions of treasury notes that turn into colored cut paper when its economy is experiencing serious difficulties. Stimulating the production of goods and services in the country, improving its investment climate, and a balanced fiscal policy are invariably named as the most effective methods of combating non-monetary causes of inflation. In Russia, at the state level, as a rule, monetary instruments were used to a greater extent, with an emphasis on administrative-command methods.
For many years, the policy of price containment used by the Central Bank and the Ministry of Finance of Russia was mainly reduced to the forced withdrawal from circulation of funds in the form of borrowing, which led to a reduction in liquidity and a decrease in the dollar exchange rate in the domestic financial market, which was largely artificial. However, it must be admitted that these measures were supplemented by others aimed at increasing the efficiency of the real sector of the economy, reducing the external public debt and other actions that served to achieve the same goal.
As recent events have shown, the creation in 2004 of the Stabilization Fund of Russia was a very prudent and thoughtful decision. As you know, it was formed primarily to "insure" the country in the event of a sharp drop in prices for energy resources, which form the basis of the domestic export potential. When, in connection with the coronavirus pandemic, oil prices fell to levels unseen in the past decade, many predicted a collapse in the domestic currency. It would seem that hyperinflation is on the verge again. However, this did not happen, primarily due to the use of funds from the Stabilization Fund. Its resources, by the way, helped to compensate for the blow inflicted on the country and its citizens by this year's quarantine measures.
We will survive the current crisis, I would like to believe, with minimal losses. However, the problem of inflation, common to the vast majority of the world's economies, will certainly not disappear anywhere. Obviously, in the future, the Russian government should focus on non-monetary methods of dealing with it. Of course, the dynamics of the exchange rate and price regulation should remain in the focus of attention of the Ministry of Economy, the Central Bank and other financial regulators. However, the most effective way is still more active stimulation of the growth of the domestic economy, reduction of the tax burden on it, stimulation of investments, primarily from exports, in the further development of the most advanced and promising sectors of the Russian economy.