By Paul Goble
The official Russian rate of inflation is far lower than the real rate of inflation most Russians are experiencing, Yevgeny Gontmakher says, not because the government is inventing any figures but rather because of the way it calculates the official rate even as it knows on the basis of its own data that that number is far too low.
The reason this is so and the reason few Russians believe the official rate, the Moscow economist says, is that the official rate is based on changes in prices for things such as foreign travel that most Russians can’t possibly afford and thus whose price changes aren’t relevant (mk.ru/economics/2021/09/30/v-dannye-rosstata-o-roste-cen-poverit-okazalos-nevozmozhno.html).
Put in simplest terms, Gontmakher says, the official inflation rate is composed in much the same way a picture of the Russian climate would be if those drawing it decided in advance only to report on developments along the beaches of the Black Sea. That would ignore reality, and so too the official rate of inflation does.
The real rate of inflation for the overwhelming majority of Russians who are too poor to travel abroad or regularly purchase durable goods reflects the cost of food and housing, things they have little choice but to purchase and which the government in reality keeps track of and could report if it were honest.
There is even a figure regularly produced by Rosstat but not widely advertised beyond the expert community that measures the inflation rate for those with more limited budgets. It shows that the real inflation for the overwhelming majority of less than super-wealth Russians is about twice what the Kremlin suggests on a regular basis.
This has got to change, Gontmakher says, not only because it is eroding public confidence in the government but also because “any movement forward will begin with a sober analysis of what we now have.” The government in this case knows exactly what that is but because the figures are alarming, it isn’t advertising them.
Only if there is an honest and regular accounting of the level of inflation for ordinary Russians is there any chance that both the government and the people will be in a position to decide what must be done and what must stop being done. Otherwise, attractive but meaningless figures will continue to get Russia in trouble.