{"id":90257,"date":"2024-06-12T13:50:49","date_gmt":"2024-06-12T10:50:49","guid":{"rendered":"https:\/\/pozirk.online\/en\/longreads\/90257\/"},"modified":"2026-03-09T20:10:49","modified_gmt":"2026-03-09T20:10:49","slug":"price-controls-may-backfire","status":"publish","type":"longreads","link":"https:\/\/pozirk.online\/en\/longreads\/90257\/","title":{"rendered":"Price controls may backfire"},"content":{"rendered":"\n<p><em>By<\/em> <em>Ale\u015b Hudzija<\/em><\/p>\n\n\n\n<p><strong>Although annualized inflation has been between 5.6 and 5.7 percent from February to May, according to official statisticians, price controls have distorted the real economic picture and can backfire.<\/strong><\/p>\n\n\n\n<figure class=\"block-image block-image-normal\">\n\n    <img decoding=\"async\" width=\"1202\" height=\"801\" src=\"https:\/\/pozirk.online\/wp-content\/uploads\/2023\/12\/tseny_1prof_by-e1718044277597.jpg\" class=\"attachment-full size-full\" alt=\"\" \/>\n    <figcaption>\n        \n                    <div class=\"block-image__author\">\n                                <span>(1prof.by)<\/span>\n            <\/div>\n            <\/figcaption>\n<\/figure>\n\n\n\n<p><strong>Annualized inflation by month<\/strong>, %<\/p>\n\n\n\n<figure class=\"wp-block-embed is-type-wp-embed is-provider-flourish wp-block-embed-flourish\"><div class=\"wp-block-embed__wrapper\">\n<iframe class=\"wp-embedded-content\" sandbox=\"allow-scripts\" security=\"restricted\" title=\"Interactive or visual content\" src=\"https:\/\/flo.uri.sh\/visualisation\/18107540\/embed#?secret=9hQAUDSFJo\" data-secret=\"9hQAUDSFJo\" frameborder=\"0\" scrolling=\"no\" height=\"575\" width=\"500\"><\/iframe>\n<\/div><figcaption class=\"wp-element-caption\">Source: Bie\u0142stat<\/figcaption><\/figure>\n\n\n\n<p>Faced with high inflation in 2022, Minsk reverted to price controls.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><strong>Imbalances<\/strong><\/h2>\n\n\n\n<p>Officials seem to be satisfied with the effect of price controls. While Alaksandar \u0141uka\u0161enka is busy with geopolitics and the world order, his government does not want to bother him with down-to-earth problems, such as economic imbalances caused by price controls.<br><br>People with law enforcement background or a poor understanding of economics dominate among the top officials.<br><br>They seem to be happy with the illusion of prosperity and stability and do not want to change anything. Problems are only solved when they escalate.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><strong>Some are more equal than others<\/strong><\/h2>\n\n\n\n<p>Controlled prices have not been rising as fast as uncontrolled ones. However, the former are still higher than the targets set by the government.<br><br>Interestingly, after a sharp decline in annual inflation, controlled prices remained at a higher level.<\/p>\n\n\n\n<p><strong>Consumer prices by month, year on year, percent<\/strong><br>Prices in general\/Controlled prices<\/p>\n\n\n\n<figure class=\"wp-block-embed is-type-wp-embed is-provider-flourish wp-block-embed-flourish\"><div class=\"wp-block-embed__wrapper\">\n<iframe class=\"wp-embedded-content\" sandbox=\"allow-scripts\" security=\"restricted\" title=\"Interactive or visual content\" src=\"https:\/\/flo.uri.sh\/visualisation\/18107578\/embed#?secret=KhQGbM0gWq\" data-secret=\"KhQGbM0gWq\" frameborder=\"0\" scrolling=\"no\" height=\"575\" width=\"500\"><\/iframe>\n<\/div><figcaption class=\"wp-element-caption\">Source: Bie\u0142stat<\/figcaption><\/figure>\n\n\n\n<p>Businesses need permission from officials to raise prices. Still, authorities allow some prices to rise above the inflation rate. In such a system, some businesses have an advantage over others.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><strong>No good options<\/strong><\/h2>\n\n\n\n<p>The government often forces efficient businesses to keep prices low at the expense of profit. On the other hand, natural monopolies and state-owned companies are allowed to raise prices based on market conditions.<\/p>\n\n\n\n<p>For instance, the price of household waste disposal services provided by state-controlled companies rose by 19.33 percent in May from the May 2023 level; water supply, by 15.39 percent; and higher education, by 14.19 percent.<br><br>The introduction of price controls in 2022 coincided with a seasonal drop in the price of fruit and vegetables. Obviously, officials knew that prices would fall soon even without their intervention.<\/p>\n\n\n\n<p>Anyway, low prices could be just as bad for the economy as high prices.<br><br>An abrupt removal of price controls can cause a price shock, while continued intervention can ruin companies.<\/p>\n\n\n\n<div class=\"insert-block\">\n\n    <div class=\"insert-block__img\">\n        <img decoding=\"async\" width=\"354\" height=\"236\" src=\"https:\/\/pozirk.online\/wp-content\/uploads\/2024\/05\/borozda_1128_krugloe-by-354x236.gif\" class=\"attachment-medium size-medium\" alt=\"\" srcset=\"https:\/\/pozirk.online\/wp-content\/uploads\/2024\/05\/borozda_1128_krugloe-by-354x236.gif 354w, https:\/\/pozirk.online\/wp-content\/uploads\/2024\/05\/borozda_1128_krugloe-by-734x490.gif 734w, https:\/\/pozirk.online\/wp-content\/uploads\/2024\/05\/borozda_1128_krugloe-by-178x118.gif 178w, https:\/\/pozirk.online\/wp-content\/uploads\/2024\/05\/borozda_1128_krugloe-by-768x512.gif 768w\" sizes=\"(max-width: 354px) 100vw, 354px\" \/>                        <label class=\"insert-block__tag--mobile\"> The Viewer<\/label>\n\n                <\/div>\n    <div class=\"insert-block__text\">\n                    <label class=\"insert-block__tag\">The Viewer<\/label>\n                <h3 class=\"insert-block__title\">Casting spells and wasting money: \u0141uka\u0161enka revamps agriculture<\/h3>\n        <div class=\"insert-block__descr\">By Ale\u015b Hudzija There are three things you can watch endlessly &#8211; how water flows, how fire burns and how Alaksandar \u0141uka\u0161enka revives agriculture &#8211; the work of Sisyphus in terms of effort and result. By analogy with the ancient &#8230;<\/div>\n        <a class=\"insert-block__btn-block\" href=\"\/en\/longreads\/87182\">\n            <button class=\"btn\">\n                <div class='btn__text'>Read<\/div>\n            <\/button>\n        <\/a>\n    <\/div>\n<\/div>","protected":false},"excerpt":{"rendered":"<p>By Ale\u015b Hudzija Although annualized inflation has been between 5.6 and 5.7 percent from February to May, according to official statisticians, price controls have distorted the real economic picture and can backfire. Annualized inflation by month, % Faced with high inflation in 2022, Minsk reverted to price controls. Imbalances Officials seem to be satisfied with [&hellip;]<\/p>\n","protected":false},"author":83,"featured_media":56903,"template":"","rubric":[24],"class_list":["post-90257","longreads","type-longreads","status-publish","has-post-thumbnail","hentry","rubric-theviewer"],"acf":[],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v25.5 - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>Price controls may backfire | Pozirk<\/title>\n<meta name=\"description\" content=\"By Ale\u015b Hudzija Although annualized inflation has been between 5.6 and 5.7 percent from February to May, according to official statisticians, price\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/pozirk.online\/en\/longreads\/90257\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" 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