RUSSIA/INFLATION.

Publication: Monitor Volume: 1 Issue: 130

The real inflation rate in Russia from January to September 1995 totaled 321 percent, compared with the same period last year, according to Nikolai Lagutin, the recently-sacked head of the Economics Ministry Department for Analysis and Prognoses of Money Income of the Population, in a recent interview with the Interfax news agency. As a result of such inflation, he said, living standards in Russia fell 12 percent since 1994, which did not happen in 1993 or 1994. "Living standards are defined as a ratio between people’s incomes and the real price rise in the country," he said. Lagutin called First Deputy Prime Minister Anatoly Chubais’ statement that monthly inflation in August-October was less than five percent a "sophisticated deception." Comparisons must be made, not month to month, but over longer periods of time, he said. (3)

Lagutin’s is a technically correct explanation of real inflation. It accounts for the phenomena of constantly rising prices and declining real standard of living in Russia, despite the stabilization and falling inflation proclaimed by the ever upbeat Mr. Chubais and other reformers.

Communists/Investors.