D) errors in the government's economic policy, and others.
External causes of inflation are:
• Structural Global Crises (raw materials, energy, food, etc.), which are accompanied by repeated price increases for raw materials, oil, food, etc. This growth was the reason for the sharp increase in prices monopolies on their products;
• currency exchange banks for foreign exchange is the need for more paper money that fills channels of money and leads to inflation.
The velocity of circulation of money in a period of inflation determined by the following factors:
Consumer-inflation of the ruble, due to a loss of state control over income and prices, resulting in increased consumer resources of money, deposits in savings banks:
-Inflation investment appreciation due to the adoption of the economic programs that are not guaranteed real resources, lack of which was accompanied by a rise in prices.
With such inflation occurs conditional balance of losses and gains (tab.1.1).
Table 1.1 - The balance of losses and gains in a period of inflation
At constant price increases there is a decline in real incomes, as the increase in prices ahead of income and in the same amount of money can buy fewer goods, is the fall in purchasing power of money. Therefore, inflation can be defined as a process of devaluation of money, or, figuratively speaking - a situation where too much money to "hunt" for fewer goods.
Therefore, we can see that inflation has serious negative economic consequences, as does considerable damage to the state's economy, reducing its effectiveness and creates a lot of social problems (unemployment, declining living standards, etc.).
1.2 Main types of inflation
Classification of inflation occurs for various reasons. There are kinds and forms of inflation:
1. In the expression of isolated creeping inflation, galloping inflation and hyperinflation. Creeping inflation - inflation, reflected in a gradual long-term increase in prices when the average annual rate of price growth of 5-10%. Galloping inflation - inflation in the form of an abrupt rise in prices, when the average annual rate of price growth is 10 to 50%. Hyperinflation - inflation with a very high growth rate of prices when the price increase more than 100% per year.
2. Inflation on the forms of manifestation is open and hidden. Open inflation - inflation is due to the free growth of prices of consumer goods and industrial resources. Hidden (suppressed) inflation - when inflation is caused by trade deficits, accompanied by the desire of the state to keep the price the same. In this case the "washout" of goods in open and flow them into shadow, "black" markets, where prices are rising. Repressed inflation generated by the activities of the state wrong. For example, introducing them to a temporary freeze of incomes and prices, upper limits of their growth, the desire to keep the dynamics of wages at a level not to exceed the growth rate of labor productivity or total administrative control of prices and costs. These actions caused unnatural monopolies and administration in the areas of pricing leads to deep strain of market mechanisms, which, of course, does not eliminate inflation, but changes its form of expression. First of all, this is expressed in a terrible shortage of goods and services. Deficit, in turn, leads to a change in the psychology of consumers and producers. But the main evil that is repressed inflation - is depriving manufacturers of price incentives that undermine the deployment of the investment process, the expansion of production and supply. Since the dependence of prices on the demand disappears, investors lose orientation and sectoral distribution of financial, material and human resources is clearly not optimal. So, repressed inflation poses the greatest danger to the normal economic life of the country.
3. By means of a distinguished demand pull inflation and offers.
- demand inflation. Observed in the case when aggregate demand exceeds production. Demand inflation is represented graphically in Figure 1.2
Figure 1.2 Graphical model of inflation of demand
Inflation offers (costs). The rise in prices due to increased production costs in terms of unused inputs. Higher costs per unit of output reduces the producers of products offered at the current price level. Graph of inflation offers can be seen in
Picture 2.
Picture 1.3 – Graphical model of inflation costs
4. According to the degree of balance emit balanced and unbalanced inflation. At first the prices of various goods to each other remain unchanged, and in the second-price different products are constantly changing in relation to each other in various proportions. Unbalanced inflation is much more common and is a great disaster for the economy as chaos rising prices complicates the orientation and assessment of the economy for the citizens, businesses and investors.
5. For predictability divided into expected and unexpected inflation. First predicted and expected advance, the second - no. This is more dangerous than expected, because individuals and economic agents do not have time to prepare for it, which can be fraught with partial or complete loss of savings. Unexpected inflation disrupts the economy can lead to panic, instability deters foreign investors, so it is assumed major flaws of the government.
6. Depending on the duration of the impact of inflation on the economy distinguished: chronic inflation, stagflation and deflation.
Chronic inflation is a long time and does not change the basic parameters of a gradual increase in the prices of goods and services, which is almost impossible to overcome. Stagflation is the impact of inflation, followed by a general decline of industry in the economy. Deflation is the reverse process of inflation, and is expressed in lower prices and increase the purchasing power of the monetary unit.
In practice, it is not easy to distinguish one from another type of inflation. They closely interact. Therefore, the growth of wages, for example, might look like and how inflation is demand and supply as inflation. Thus to obtain a more complete picture of inflation is necessary to study the classification of the phenomenon and competent to determine its type.
1.3 Socio-economic effects of inflation
In economic practice market entities is not only fully and correctly measure inflation, and therefore assess its impact and adapt to them. Inflation generally has a destabilizing effect on the economy. Even small growth rates can lead to significant economic and social consequences.
Inflation has contradictory effects on growth. A slight inflation (3-4% per year) can temporarily stimulate economic development. Moderate growth is the rise of income and aggregate demand, which creates opportunities for businesses to expand production, involvement in the production of unused labor and material resources. Weak inflation may be a means of enhancing the business of life and the reduction of unemployment.
Failure to follow the same steps that lead to far-reaching negative consequences for the economy. During inflation the market pricing mechanism distorted that provides all businesses information on the value of the economic cost of production and sale of various products as well as changes in public demand for them. General rise in prices causes a "flight from money" to expensive goods, regardless of the actual need for them, which distorts the structure of consumer demand. Producer loses right direction in the development of production. As a result, there are numerous economic imbalances, slowing the introduction of new technology, decreases the efficiency of resource use. Race prices, their uneven disrupt economic relations in society, destroying the existing relationship between the economic actors. All this affects the rate of economic development and its quality.
Another consequence - lag in prices of public enterprises on market prices. In the state (regulated) sector of the market economy in production costs and prices of goods are revised less frequently and for longer than in the private sector. In terms of inflation each increase their prices SOEs must justify, receive permission to do so all the parent organizations. It is long and inefficient. With monthly sharp, unexpected and abrupt rise in inflation this mechanism even technically difficult to implement. As a result, increases the imbalance of the private and public sectors, the state loses its economic potential market impacts. This effect is particularly dangerous.
Inflation also reduces the money savings. Price increase leads to an impairment of deposits and lower yield savings. Savings brings less and less real income. At some stage, the pace of price growth can outstrip the rate of interest and give it a negative value. In these conditions, conservation loses economic sense. Population and corporations seek to materialize their rapidly depreciating money supply. Companies are developing plans to enhance the use of financial resources. With the development of inflation, investors (in order to protect their savings) and submit them for the purchase of high-yield securities, foreign currency, property - real estate, jewelry, works of art, and consumer durables. Accumulation in the society bought primarily commodity-material form. Most of the population that does not have the possibility to use their savings, sends them to increase current consumption and demand. The deficit is growing in parallel with the "glut" warehouses of enterprises and organizations, cluttering apartments population.
The loss of monetary incentives for savings disrupt monetary system. Provision of funds for loan becomes profitable and beneficial to the creditor to the debtor. Credit obtained a full money back impaired. In these circumstances, reduced the share of long-term and medium-term loans. Implementation of long-term investment is risky.
Inflation has a negative impact on investment. Reduction savings in the community and long-term lending curtailment of production leads to a reduction in investment. With the loss of stable sources of funding entrepreneurs refrain from implementing major investment projects, especially with a long payback period. Inflation distorts the structure and investment. Is the flow of capital from the production to the trade and the area of speculative financial transactions. Disinvestment leads to technical and technological backwardness and cost increases, which in turn stimulates the inflation in the country.
Inflation affects the state of public finances. On the one hand, financing the budget deficit by increasing the money supply the government imposes a specific population of the inflation tax. Using the increased money supply to pay for goods and services purchased, the government reduces the real purchasing power of the money placed in the hands of the people. This means the actual seizure of their real income to the state. Besides, inflation helps the state to address the problem of domestic debt, allowing it to pay its obligations depreciated money.
On the other hand, inflation devalues the tax revenues that are not in a position to really meet the growing government spending. The government was forced to seek additional funds for this purpose, including the use of money. This is even more spins the inflationary spiral and destabilize the financial system of the country. In these circumstances, the economic levers of state regulation of the economy loses efficiency, reduced public confidence in government efforts to weaken the power structures in general.
Another consequence of inflation - the instability and lack of economic information, hindering development of business - plans. Price is a leading indicator of the market economy. Pricing information - the main business. At the same inflation rates are constantly changing, buyers and sellers of goods is increasingly mistaken in choosing the optimum price. Falling confidence in future income, the population loses its economic incentives, reduced business activity.
Next effects of inflation - the real money interest rate is reduced by the annual percentage increase in inflation. And finally emphasize that inflation is almost always combined with high, although part-time work and a large amount of national production. Conversely, a decrease in inflation coincided with the decline of production and rising unemployment.
The negative effects of inflation evident in the field of foreign relations. Inflation has a negative impact on the balance of payments of the country, leading to a depreciation of the national currency, creating problems of repayment of foreign debt. With rising prices in the domestic market is declining exports and rising imports. The balance of payments is negative. For the balance of payments the state has to use foreign exchange reserves, and then, when the reserves are exhausted, devalue the currency. The latter measure although increases export opportunities for the economy, but creates difficulties in the development of end-uses of imported goods or raw materials. In addition, the devaluation makes it extremely difficult external debt: to return the unit of foreign currency requires increasing the number of units of the national currency.
An important consequence of inflation is to redistribute income. With rising living standards reduced the general population by reducing its real income. However, different social groups have different degrees of loss from inflation. First, the rise in prices affects persons who receive fixed incomes, pensioners, students, the unemployed. Government measures to the indexation of pensions, allowances, benefits, tend to lag behind the increase in prices. Significant losses are almost all persons employed in the public sector. Wages, especially of education, science, culture, etc., always grows more slowly than prices. This reduces their motivation to work. Is the movement of labor from these socially important spheres in more profitable sectors.
Deterioration of living conditions mainly from representatives of social groups with solid income (pensioners, employees, students, whose revenues are from the state budget).
People with fixed income can benefit from inflation, as this category of increase in nominal income can grow faster than prices. In addition to being more affluent sections of society which are not available in the preservation of their savings and income by purchasing real estate, foreign currency, objects of art, securities.
In general, high inflation reduces the real possibilities of the effective functioning of the national economy, deteriorating conditions of most of the population, deepening economic inequality between men and exacerbates social tensions.
Chapter 2. Inflation in Russia and anti-inflation policy of the state
2.1 Problems to maintain inflation rates in Russia
The problem of reducing the rate of inflation is the most relevant in the Russian economy. Despite the improvement in macroeconomic indicators, the need to further reduce the rate of inflation, which is much higher than in many other countries, is still needed.
Many experts, scholars and practitioners, distinguish the following problems of reducing the rate of inflation in Russia and offer solutions:
1. One of the main problems of reducing the rate of inflation in the Russian economy is the dependence of domestic energy prices on world oil prices. In Russia, creation of a stabilization fund created incentives to encourage exports instead of concern for domestic energy prices and the consumer, so we can say that the very Russian legislation promotes communication growth of domestic prices to world prices.
Experts suggest not to allow domestic prices for raw materials and energy prices following the world through the use of export duties and taxes.
2. A factor of formation of cost inflation has been highlighted - rising prices for natural monopolies and utility tariffs. So in 2005, while consumer prices by 10.9% of the price for paid services, which play a significant role tariffs of natural monopolies and utilities, increased on average by 35%. This situation is, therefore, cost inflation and blocks the development of industries in non-fuel and energy complex.
In addition, it should be noted that the reduction of VAT rates and the abolition of the sales tax does not contain prices. This indicates a low price elasticity at lower cost producers and sellers, and therefore ineffective as anti-inflationary tool.
As measures to fight inflation costs can be used: the use of anti-trust action against the natural monopolies and public utilities, ensuring effective control over the prices.
3. Deterioration of issuing money in connection with a predominance of foreign exchange and lower loan component. Currently widely used currency channel money issue, while credit is regarded as an inflationary factor. But, although it is noted the possibility of inflationary impact of the loan on its mismanagement, many experts put forward the position of its anti-inflationary nature. Credit increased the money supply only within the already issued money. In short-term lending money follows the movement of the goods, without creating excessive inflation of the money supply, and the production of new products will neutralize the negative effect of credit issue. For long-term lending to the time lag between the issuance of the loan and the creation of new values occur if the timing of active operations of banks exceed the terms of their passive operations and bank liquidity deteriorates. Credit in the form of commodities does not affect the money supply and promotes the sale of goods. With all the advantages of credit nature of money, as noted earlier, found relatively little impact of indirect instruments of monetary control on the scale of money circulation in the country, and much more significant impact of direct channels to issue money, now the currency channel. Indirect monetary management practices scale monetary launched into action in crisis and pre-crisis situations, when, in fact, demonstrate its low capacity. Also criticized nesostykovannost monetary, fiscal and structural policies with the interests of the money supply and the task of reducing inflation.
Experts have developed proposals to address this problem: to develop a program for the development of credit into a single monetary Plan to its positive impact on economic growth and currency, to create a comprehensive system of refinancing banks, the Bank of Russia to form a scientific advisory council to discuss the main trends in the development and improvement of national monetary institutions.
4. Another equally important issue affecting inflation, is the removal of the stabilization fund, which in turn reduces the growth of GDP and thus spur inflation. Stabilization Fund into a growth brake, as an argument include the following calculations: the use of a stabilization fund replenishment (1.2 trillion. Rub.) Would provide additional GDP growth of 1.6%, with an average efficiency of budget funds. The government plans to steadily budget surplus money declared redundant, and placed in the Stabilization Fund, and the urgency of modernizing the economy is, the money is not invested in the economy.
In addition, the situation is aggravated by the influx of foreign currency in the form of foreign investment, and persistent inflationary expectations of economic agents and the public.
As a solution to these problems is proposed: the active involvement of the state in the economy, both in order to protect the domestic market, and for the development of economic activity in the areas of high-value products, to build on the accumulated investment potential in order to improve the competitiveness of the economy and welfare. The problem of inflation expectations is proposed to solve by building confidence in the ruble of the Russian society, authorities, market participants also prompted monitoring inflation expectations.
Having considered the problem of reducing the rate of inflation in Russia, I would say that this is not an exhaustive list. In summing up the above should be added that one of the solutions to the problem of inflation is the need to move away from ad hoc measures to a comprehensive program to reduce the rate of inflation in order to ensure sustainable economic development.
2.2 Analysis of the rate of inflation for 2010-2011.
Consider the main indicators of social and economic development of the Russian Federation, the most relevant to the rate of inflation (Table 2.1):
Table 2.1 - Basic indicators of social and economic development of the Russian Federation 2010-2011.
Table 2.2 - Inflation and rising food prices (inflation, in% to the previous month)
Slower growth in consumer prices observed since the middle of the I half of 2011, due primarily to the decline in international prices for grain and most kinds of food, increasing imports of food against the strengthening of the ruble.
A positive role in reducing the rate of increase in consumer prices also played adopted in late 2010 - early 2011. Russian Government measures to saturate food markets, including the promotion of imports of goods. Negative contribution to inflation (-1.8 percentage points) made cheaper produce from April to August 2011 at 28.45%, after growth for the period 2010 - March 2011 by 68%, thanks to the temporary cancellation of import customs duties on potatoes, some vegetables in the off-season. Also due to the high estimates of the expected harvest in 2011 dropped the price of grain, flour, sunflower seeds and other goods, which slowed growth or lead to a drop in the prices of most socially important goods (bread, pasta, sugar, cereals, vegetable oil).
2.3 Anti-inflation policy of the state in 2011
Causes of inflation in 2011:
- Growth in utility tariffs (in 2011 price increase of heat energy to the national average was 12% -14% for water and sanitation - 18% -20%, electricity - by 10%, for gas - the 17%. The total payment will not be increased by more than 15%);
- Rising prices for sugar (the world market);
- Higher prices for beef and pork;
- Growth in food prices (buckwheat, potatoes);
- The growth rate of insurance contributions to extra-budgetary funds (from 26% to 34%);
- Increase of budget expenditures;
- Higher prices for gasoline (April, May 2011);
- Low level of competition in key sectors of the economy (high level of monopolization of the economy, a large number of cartel agreements among large enterprises in the industry);
- High trade barriers for food products (import duties);
- Seasonal factor: undisciplined government organizations lay most of the cost of the end of the year than up inflation.
Expensive foods affect all countries. Because of rising wholesale prices and the largest power supply manufacturers to raise selling prices in retail, leading to an increase in inflation.
In early 2011, the top gainers were buckwheat (2.3%), wheat (+2%), cabbage (1.7%) and onions (1.6%). Sunflower oil, margarine, beef, bread and flour rose by 0.6-1.1%. The average price at the beginning of the year for food increased by 2.6% and services - by 4.1%, non-food products - by 0.9%. The largest growth was potatoes (+23%).
In March, compared to other products especially wheat gone up significantly (+9%), buckwheat-Unground - by 8.7%. Cost of the minimum food basket in Russia on average at the end of March 2011. Amounted to 2,845.1 rubles per month. The month of its value increased by 0.7% since the beginning of the year - by 8.4%. At the same time, the decrease in prices for lemons (-4.8%), grapes (-4.6%), pears (-1.7%), potatoes (-1.1%) and sugar (2, 2%). Fuel prices, thanks to the intervention of the state, reduced by 0.8%. Among other products, decliners (Rosstat) in March - computers and cell phones, winter shoes and clothing for adults and children, equipment for measuring blood pressure, washing machines, cameras, home plate and players.
In April of products one of the leaders in terms of price increases were eggs - they went to the national average of 6.2%. Still recorded a marked increase in the price of millet and buckwheat - 7.2 and 5.8%, respectively. Prices of red beets increased by 13.4%, fresh white cabbage - by 2.1%. For April fell potatoes, pears, lemons, grapes (3-5%), bananas (10%). Non-food items are cheaper wood, cut flowers, winter jackets, coats, boots, personal computers and cellular phones (in the background rising in price of soap, cigarettes and gasoline).
In May, food products without fruit and vegetables rose by 0.2% and 10.9%, respectively. Non-food prices rose by 0.8% and 5.9%. Prices for services rose in May by 0.7%, and for January-May - by 8.2%.
After five months, food prices rose by 14%.
In June of non-food items rose other petroleum products - by 1.7% ..
The food prices in July fell by 0.7%, which made a negative contribution to inflation (-0.3 percentage points), non-food items in July have risen by an average of 0.3%, which contributed to inflation of 0.1 months n . etc. The largest contribution to the aggregate CPI in July contributed services (0.17 percentage points), grew by 0.6% (0.7% - in June).
State inspection revealed as unjustified rise in utility rates, which is due to the fact that the company overstated the cost of maintenance of infrastructure and lay them in the tariffs. In addition the system utilities used outdated guidelines consumption, particularly water, which leads to an increase in the cost of repairs. The average for 2011 growth in utility tariffs fixed at 11.5%.
Reasons for the decline in inflation in 2011:
- Low consumer demand;
- Strengthening of the ruble (ruble strengthening helps to reduce inflationary pressure);
- Stabilization of prices on global food markets (2-3 quarters);
- Slowing growth in food prices in the domestic market;
- The growth in imports of cheap fruits and vegetables;
- Reduction of monetary pressure;
- Seasonal factors: lower fruit and vegetable prices in July and August.
Anti-inflationary policy of the state in 2011.
- Inflation targeting (control of the rate of growth of the money supply within limits);
- Sales of grain from the intervention fund (about 5.6 million tons of grain, monthly trading volume will be up to 500 thousand tons of grain (including 100 thousand - feed), they were held until the end of June 2011);
- To maintain a stable level of grain prices in the domestic market in October 2011, was restricted grain exports within 24-25 million tons (more than these limits are introduced higher tariffs);
- The tightening of monetary policy - raising interest rates;
- Increase from 1 February 2011. Reserve requirements for credit institutions' liabilities to non-resident legal entities in rubles and foreign currency - from 2.5 to 3.5%. Since March 25, reserve requirement increased from 4.5% to 5.5%, on liabilities by individuals and other liabilities of credit institutions in rubles and foreign currency - from 3.5% to 4%;
- Tightening antitrust measures (excessive prices for medicines, fuel and food);
- Regulation (fixed) prices for electricity and gas;
- Reduction of import duties (at the national level and the level of the customs union) to a number of food products (sugar, buckwheat, corn);
- Borrowing money in the financial markets - open market operations (placing Eurobonds of the Russian Federation);
- Expansion of the exchange rate band (flexible exchange rate);
- Termination of exports of gasoline in May and June in order to stabilize the situation in the domestic market. Export duty on petrol from May 1, 2011. Be 408.3 dollars / ton, which is 34% more compared to the originally scheduled for May of duty and 44% - compared to operating in April. In June the fee increased to 415.8 million;
- Increased refinancing;
- Reducing government spending on defense and the Interior;
- Cuts in public investment (the costs of the federal programs, support to legal entities and mortgage programs)
In 2011, the inhibition of growth of consumer prices will be achieved primarily by means of monetary policy. In the first quarter of 2011 due to administrative measures (price fixing), the government managed to slow the pace of inflation to 0.2-0.5% per month.
In Russia, the monetary factor on inflation almost no effect (the contribution of monetary factors on inflation in the range 5-6%). The share of the money supply, which serves the Russian economy, relative to gross domestic product (GDP) is significantly lower than in any other country in the developed market economies.
Ways of improving the anti-inflation policy in the Russian Federation:
- Reduction of customs duties;
- Changes in tax policy (reduction of insurance premiums to the Pension Fund);
- Regulation of natural monopolies' tariffs (within the inflation rate of the previous year). With inflation below 7% cost increase rates by the same amount, adjusted by 1% to 2% on top. Otherwise, the main industry will lose attractiveness to investors;
- Tighter control over prices;
- Subsidies and reimbursement for fuel farmers;
- Creation of a financial fund to regulate the price situation on the food market in the country (an increase in grain prices - a significant risk factor for higher inflation in Russia, so the price situation on the grain market has a decisive importance to the situation in the food market as a whole.);
- In terms of the law "trade" (fixing the prices of products, if prices rise by more than 30% within 30 calendar days. Law will also permit certain laws on pricing or limit any extra charges for goods);
- Tightening competition law (the criminalization of collusion, anti-competitive, so-called cartels);
- To stabilize the prices of petrol and petroleum products offered oil companies that plans to repair refineries with relevant agencies; seasonal reservation fuel binding rules for the supply of petroleum products to the domestic market in licenses to deposit with reserves of 5 million tons of oil equalization duties on crude oil and heavy oil.
- Introduction to the social norm of consumption of utilities of resources within this standard prices will be recorded, exceeding the same standards will be billed at a higher price;
- Redistribution of most food products in the domestic market. Proposes the creation of a new model of the distribution of food products:
a) the saturation of the domestic market;
b) the creation of a reserve for the next period;
c) sale in foreign markets.
At the time of 2011 operated model, focused mainly on the external market.
Conclusion
Inflation has existed since the economic development of humanity, but entirely revealed recently, affecting the economy in both developed and developing countries. In a developed market economy inflation can be considered as an integral part of the economic mechanism, where it may not be a serious threat. Whereas in countries undergoing transformation of the economic mechanism, the inflation process is deployed, as a rule, in the increasing rate. This is very unusual, a specific type of inflation that are difficult to control and regulation.
Effects of inflation economically painful and dangerous, negative impact on the finances, monetary and economic system as a whole. Inflation does not only mean the loss of purchasing power of money, it undermines economic regulation, nullifying the efforts to implement structural reforms, restoration of disturbed proportions. By their nature, intensity, manifestations inflation is different, though, and is denoted by one term. Inflationary pressures can not be regarded as a direct result of just a policy, the policy of expanding the money issue or deficient regulation of production, since the rise in prices is the inevitable result of the underlying processes in the economy, an objective consequence of the growth imbalances between supply and demand, production of consumer goods and capital goods, the accumulation and consumption, etc. As a result, the process of inflation - in its various forms - is not accidental, but very stable.
Control inflation is the most important problem of monetary and economic policy in general. To consider in this polysyllabic, multifactorial nature of inflation. It is based on not only monetary, but also other factors. For all the importance of public spending cuts, the gradual contraction of the monetary issue requires a broad range of anti-inflation measures. Among them - the stabilization and stimulation of production, improve the tax system, the creation of market infrastructure, increasing the responsibility of enterprises for the results of operations, changes in the exchange rate, holding certain measures to regulate prices and incomes.
Normalization of monetary inflation and opposition demands tuned, flexible solutions that consistently and purposefully carried out in life.
Today one of the main objectives of politicians and economists Russia is to reduce inflation.
To do this, special attention is paid to de-monopolization, the elimination of corruption, an internal competitive economy and the real development of the civil society.
The consequences of the heat wave in 2010 had a negative impact on inflation. Because of the drought in major agricultural regions of Russia in 2010, the harvest had dropped significantly, leading to a significant increase in food prices, from III quarter of 2010. As a result, the overall consumer price inflation in 2010 was 8.8%, which is worse than the original projections. While inflation has not exceeded the post-Soviet low achieved in 2009.
In early 2011, there was a significant acceleration of consumer prices. However, due to the actions of the Government and the Bank of Russia, as well as lower food prices in world prices has slowed. Since the beginning of the year (as of June 14, 2011), the consumer price index was 4.8%, for the year is expected to increase prices in the range of 6.5-7.5%.
In 2012 the task of reducing inflation to 6%, in 2014 - to a level that does not exceed 4-5%.
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