The increase of the cost of main food products will not be controlled by the state regulation of price formation. According to the resolution of the Cabinet of Ministers, the rule about the maximum 15 percent markup is abolished starting from July 1 for 15 groups of products (bread, meat, flour, cereals, and dairy products). The matter is in exactly those food products, which Ukrainians buy every day spending (on average) 57 percent of their earnings on them.
Ukrainian MP Oleksandr Feldman emphasizes that the goals declared by the government look appropriate for the developed countries with market economy – the reduction of administrative pressure on business, the development of competition, the red tape reduction.
“However, is it really appropriate from the point of view of the present-day Ukrainian reality?
It is possible to let the prices ‘float freely’ and to substantiate it with the ideals of neoliberal economy, but it will be already impossible to turn them back. Only according to the official data, the 25% inflation was recorded in Ukraine in 2014. In 2015 it was 43%, and in 2016 it was 12%. Now, according to the expert estimates, the rise in prices during the year may increase again up to 20% including due to the similar measures.
It should be noted that the official inflation rates and the data of the state statistics are, perhaps, not the best demonstration of the real situation. The state statistics service constantly changes the methods of inflation calculation always adjusting the list of goods and services forming the consumption bundle, and even the share structure of the bundle.
For example, in 2015, after the rapid increase in public utility prices, the weight of this item in the structure of expenditures was artificially decreased from 11.3% to 7.5%, while according to the previous procedure it should be increased to 16.5%. By this, the total index of consumer prices was underestimated ‘on paper.’ But is there someone who feels better from this? It is difficult to believe that in the current structure of expenditures of an average Ukrainian citizen, the utility bills make up only 7.5% of all outgoings.
In 2017, the consumption bundle for inflation calculation was reduced from 335 to 328 items. Some goods and services were united into one category in order to decrease the rise in their prices on paper. The others (where the real price rise was noticeable the most) were completely excluded from the consumption bundle.
I think each of us instinctively noticed that the real increase in prices of everyday products substantially exceeds the official inflation statistics.
I would like to be wrong, but the new initiatives of the government may cause the increase in prices of everyday food products, and it will be a painful blow to the wallet of Ukrainians despite any statistical manipulations used by the authorities to conceal this. The government should revise this decision and continue to control the prices of at least the key products in order to protect Ukrainians from the new wave of price rise.
