Due to financial crisis, the inflation in the European countries remained without special attention, while its level beat records. In August it reached 4.1%, which is twice higher than the two-percent limit, established by the European Central Bank (ECB) for the countries of Euro-zone. World inflation still remains at the sufficiently high level irrespective of the fact that world oil price descended from its record values, established in the mid July of this year. According to the theory, this leads to a decrease in the level of inflation. But this is only theory, since situation shows opposite.
Thus, during the period from the mid July to mid August 2008, the gasoline in Great Britain, Germany, France and Italy fell in price by 5-6%, price of the fuel mazut in Germany and France fell by 10%, and inflation in the European Union took swift rates.
However, despite this reduction in the prices, the gasoline in Europe is now 10-12% more expensive than in August last year. They grow for the Europeans as compared to the last year and the price of gas: over past period of the current year, French EDF raised prices for gas by 15% and British energy companies - by 15-30%. Due to this, the level of consumer trust is at the sufficiently low level in Euro-zone. The analysts say that still it is unworthy to expect increases in this index, since the economy of Euro-zone is now close to the strip of recession.
The high inflation in Europe, as a rule, means higher inflation in the regions neighboring with the European Union, and also in such large commodity suppliers for the European Union as China, Russia and Ukraine. The level of inflation in Ukraine was almost 15% in the period from January to August. This index in Russia approaches 10%. At the same time, an increase in the prices of food products in Russia since the beginning of the present year has exceeded already 12%. This more than 4 times exceeds the rise in price of foodstuffs in the EU countries.
On the rates of inflation, Azerbaijan occupies the fifth place in the list of the CIS countries high level of inflation. Since the beginning of the year the inflation in Azerbaijan was 13%, and as compared to the last year, it beat the record sizes in volume of 21.3%. According to the data by the CIS Inter-Governmental Statistical Committee, the leader on the level of inflation in the CIS became Tajikistan (30.7%), and the second - Kirghizia (26.9%).
The experts mention three basic sources of inflation, which whipped the world from the last year. Firstly this is a food shock, which is incurred by all countries from the mid last year. The second reason is the high prices for gas and oil, since the energy determines the cost of many goods. The third is financial. FRS dissipated crisis of 2001, beginning small recession with sharp reduction in the rates and making additional liquidity to the American financial system. This led to the continuance of cheap money in the world economy and stimulated inflationary development.
Meanwhile, the high level of inflation in the world already caused protests and concerns. For example, on 18 September in Italy the active consumer groups ended the purchases of bread everywhere, thus, expressed their anger with irrepressible increase in the prices and to impel government to take measures. Mass emigration to the West of labor resources from the countries in the east of the European Union also draws attention. As a result, the wages rapidly grow in these countries.
Thus, as a result of strikes in April at the plants of Renault-Dacia in Romania, the wage of the workers was increased by 22%. Last year in Estonia the wage grew by 21%. In Latvia, from where also scale emigration to the West is observed, wages grew by 32%. The strikes of doctors, nurses, judges and customs officers took place since the beginning of the year in Poland. They all completed by an increase in the wages. However, an increase in the wages, in turn, also contributes to an inflation rate.
No one can give guarantees that the level of inflation in 2008 and even in 2009 will return to the level of 2%. Problems are aggravated by the spread of crisis in the financial markets, and the prospects of the European economies considerably weakened. Although Europe met these financial shakings, possessing strong economic determinants, the second effects of the expected moderate recession in the USA, the global overestimation of risks and tension in the financial system undermine the forces of its economy.
Unfavorable forecasts were made by the International Monetary Fund (IMF) in its World Economic Outlook Report. According to the forecasts of the IMF, the growth rates in the countries with the developed economy will be close to zero at least by the mid 2009, whereas increase in the countries with the forming market and the developing countries will slowdown considerably to the lower rates than recently. Experts forecast that the increase in the world economy will reduce from 5.0% in 2007 to 3.9% in 2008 and 3.0% in 2009.
According to the forecasts of the IMF: difficult situation is expected in Azerbaijan: the level of annual inflation will increase in 2008 to 22.4% and in 2009 it will be 20%. The reasons for so high index of inflation in Azerbaijan, which could not stop even the most active efforts of government, are inflationary development in the world markets. And the consumer market of the country considerably depends on import. The flow of money still continues firstly from the oil and export. Dollars come to the country, which the National Bank changes to manat.
The last one go into turnover, and large part of such money is spent on consumer products. Moreover, inflation in Azerbaijan is explained by a sharp increase in the Public expenditures (for social sphere, investments into the economy). An increase in the budget expenditure brings to an increase in the wages in the private sector and causes general inflation.
Larger impacts of external factors than internal on the inflation earlier was considered as the positive consequences of globalization. However, today the relations of the developed and developing world are being re-considered. The next round of reduction in the rates in the USA stimulates the developing countries to push upward prices, which strikes also the developed countries. For the authorities of the rapidly-growing developing states it was possible to retain their currencies from the strong strengthening, and to combat inflation. Now it does not succeed. We face a difficult situation: even under the retardation of an increase in the world economy, we will not be able to design for rapid reduction in the inflation.