Inflation is a common phenomenon in the modern world when, for whatever reason, the national currency depreciates. Most often, this is manifested by a direct increase in prices for goods and services, but sometimes it disguises itself as if in a hidden form, which can create the illusion of its absence. The article describes what is characterized by hidden inflation.
What is inflation?
Usually inflation is understood as an average price increase, and not an increase in the cost of certain goods and services against the background of the absence of an increase in the rest. With inflation, most of the goods become more expensive. By the intensity of the course, it is divided into 4 categories:
- slow
- galloping;
- high;
- hyperinflation.
The causes and consequences of inflation
The cause of inflation is the accumulation of free-flowing money supply in the absence of growth in production, or with its decline and constant position. If the economy does not grow or decline, and the state seeks to maintain the previous level of social benefits or increase it, then inflation will inevitably arise.
The consequences of inflation can be: a decrease in real incomes, the depreciation of accumulated savings and even social stratification.
What is open inflation
The main manifestation of this type of inflation is a visible increase in prices. At the same time, natural market regulation of production and pricing is maintained, so there is no imbalance. Small inflation may even be useful for the development of production and the market. However, if prices begin to rise too quickly (more than 10% per year), then a negative effect arises. Such inflation requires the intervention of banks and the state.
The manifestation of hidden inflation
Such inflation is called the increase in the cost of production, which is not accompanied by a change in the price tag in stores. That is, this is an increase in the gap between market value and prices set in stores. As a result, the market mechanism of price regulation is violated. Usually this happens when government authorities or large companies try to prevent price increases for manufactured domestic or other products. Also, the state, companies, employers can limit the amount of wages from both the lower and upper sides. In the absence of a sufficient financial and material base, the first leads to unemployment, and the second leads to the transfer of some citizens to the informal sector. In recent years, a combination of open and hidden inflation has been observed in our country, which has become especially unfavorable for the population.
In order not to work at a loss, companies begin to use various tricks, thereby reducing the cost of production of their products and their composition. The victim in this situation will be, first of all, the buyer, who is forced to purchase low-quality goods or products from the seller.
Inflation in the USSR
Hidden inflation is most characteristic of a command economy. The peculiarity of the situation in the USSR was that the quality of the products was regulated by the state, and production was also state-owned. Products were not enough, and prices were not very high, which often led to shortages and queues. The number of outlets was limited. However, most products were affordable and generally of good quality, but there was often a shortage of goods.This led to speculation: the resale of rare goods by private individuals, but at a higher price than established by the state.
Effects
Hidden inflation is very unfavorable for the economy. It contributes to the degradation of industry, the closure of enterprises, the development of a shadow economy and a decrease in the profitability of production. The business environment is deteriorating, which may lead to bankruptcies of small companies. This is also facilitated by the trend towards monopolization. Unemployment is increasing, the number of illegal vacancies, and part-time jobs are growing, where people can get more than official work, and the employer does not pay taxes to the state. Obviously, this situation requires a change in the country's economic course, a reorientation to the development of industries, an increase in legal wages, and a reduction in the tax burden.
What can be attributed to hidden inflation in recent years
In recent years, Russia has seen a sharp deterioration in the quality of consumer goods and food products, as well as some services, especially medical ones.
Obviously, all this became a reflection of that hidden inflation. How is this manifested?
- The number of low-quality or defective products has increased dramatically. As a result, you still have to overpay, as poor quality goods quickly become unusable, or require more to achieve the desired effect. This may be due to the purchase of cheaper products abroad, as well as to the reduction in the cost of production of domestic goods to the detriment of their quality.
- The decline in food quality began since the collapse of the Soviet Union, but has accelerated sharply in recent years. Worst of all, in some cases, the products have become more harmful.
- The deterioration in the quality of bread and bakery products was manifested in the use of cheaper flour, weight reduction, an increase in the amount of salt in a number of flour products, and an increase in fried foods (which further reduces the nutritional value and increases the content of harmful substances).
- Bulk and liquid products in some cases began to weigh less, and the quality of milk and dairy products decreased.
- To increase the weight of frozen products, ice began to be reported there. Dilution of juices with water and more active use of starch in many products are also practiced.
- Semi-finished products, cheeses and other products in many cases began to be overdone, probably in order to hide their low quality.
- In ice cream and other dairy products, as well as in sweets, sweet pastes and other products, palm oil and margarine are now actively used instead of milk fats, which are cheaper and more harmful than milk fat. At the same time, the use of margarine in baking is not modern know-how, since it was also actively used in the Soviet period. However, the quality of ice cream has deteriorated sharply in recent years.
- The quality of fish (often due to improper storage and transportation), sausages, wieners and a number of other meat products, eggs and semi-finished products also decreased.
- There was a decrease in the content of products in one portion in public catering places, and in the service sector the number of free services decreased.
- A deterioration in the quality of medicine, at least free.
If you observe, then notice the deterioration of the situation is quite real.