Despite the fact that back in May the opposition demanded that the government curbs inflation, the Cabinet did not take the necessary measures, which led to lowering of living standards of Ukrainian citizens and an increase in poverty in the state. The situation has forced Serhiy Lovochkin, the OPPOSITION PLATFORM – FOR LIFE MP, to address the head of the government, PM Volodymyr Hroisman, with a request to take urgent measures to control inflation.
“I propose to urgently take measures aimed at controlling inflation, as well as introducing effective mechanisms for minimizing the negative social consequences of increasing prices and tariffs. Please inform me within the statutory period about the results of the measures taken,” the inquiry reads.
Lovochkin reminded that in May this year, in his inquiry to the Cabinet, he emphasized the need for urgent actions of the government to reduce inflationary pressures and minimize the negative social consequences of inflation, but these measures have not been taken.
Meanwhile, since early fall, the price increase has accelerated significantly. During September-October 2018, the value of consumer goods and services grew by 3.6 percent, which is one half of the inflation increase since the beginning of the year – 7.4 percent.
“The negative social consequences of rising inflation are exacerbated by the fact that the prices of goods and services of the highest demand are rising rapidly. Since the beginning of the year, food products have grown by 4.5 percent more expensive, including bread by almost 16 percent, pasta – by 11 percent, fish and fish products – by almost 10 percent, meat and meat products – by 9 percent,” Lovochkin said.
In addition, according to him, the affordability of passenger transport services to citizens is decreasing, as far as fare prices rose by 14.2 percent since early 2018, including road transport – by almost 23 percent, railway – by almost 16 percent. Since the beginning of the year, the cost of education services has increased significantly – by 13.2 percent.
“At the same time, the number of citizens who can't afford paying for utilities is increasing. Since the beginning of the year, utility fees rose by 3.6 percent. This results from inefficient activities of the system of social protection of citizens under conditions of sharp increase of utility rates: a 22-percent rise of maintenance of houses and adjoining areas since the beginning of the year, a 17-percent increase of water supply fees, a 17.3-percent increase of sewerage fees, and a 10-percent rise in housing maintenance and repair rates. Communication services are also among leaders of rising fees – almost 12 percent since the beginning of the year; while healthcare service fees grew by 7.1 percent,” the MP said.
He noted that due to these trends, Ukraine has become the leader in price increase among European countries (Turkey not included). In October 2018, compared to the same period of last year, prices in Ukraine increased by 9.5 percent, while in the EU countries the situation is as follows: in Poland – by 1.7 percent, in the Czech Republic – by 2.2 percent, in Hungary – by 3.8 percent, in Lithuania – 2.9 percent, in Romania – by 4.3 percent; in the CIS countries, in particular, in the Russian Federation – 3.5 percent, Moldova – 1.2 percent, in the Republic of Belarus – 4.9 percent.
“The main factors behind this phenomenon are miscalculations in the governmental social and economic policy. First of all, it is the issue of the reduction of state support for farmers, the abolition of state regulation of prices for socially important goods, and an increase in administratively regulated tariffs, primarily for utilities,” the politician says.
He believes that the failure of the Cabinet of Ministers to provide effective support to Ukrainian exporters has led to a significant deterioration in the balance of foreign trade, which hit a record shortfall after 2013. This negative trend, together with the growth of external debt repayments, causes further growth of the devaluation pressure on the national currency.
The inquiry reads that resulting from these factors, prices will continue to gain momentum during the last months of 2018 and will reach at least 10.5-percent increase in annual terms. It can be asserted that at current year end, Ukraine will retain its leadership in Europe (Turkey not included) in terms of annual inflation, which is more than four times higher than the average for the EU countries. The authenticity of this forecast has been recognized by the National Bank, which warned that inflation would exceed 10 percent by the end of the year.
“Keeping inflation at the two-digit level for the fifth year in a row signals that the anti-inflation policy of the government and the National Bank has failed, who together cannot ensure price stability and control inflation. Low efficiency of the steps taken by the Cabinet of Ministers in this direction has led to the rampant spread of poverty among the Ukrainians, the main reason for which is constant rise in prices and tariffs. The level of absolute poverty in Ukraine doubled over 2014 - 2017, and, according to the Global Wealth Report rating, Ukrainians are recognized as one of the poorest nations in the world in terms of personal wealth of citizens,” Lovochkin summed up.Follow @serhiylovochkin