Lukashenko Makes Inflation Illegal

The President of Belarus Alexander Lukashenko has announced that any price increases are now illegal.

“It starts today – not from tomorrow, but from today, so that prices cannot be inflated during the course of today,” Lukashenko said.

The last dictator in Europe, before Russia’s president Vladimir Putin came along, complained that prices were “outrageous.”

“Meat, dairy products, poultry… are getting more expensive. In Minsk there has been a shortage of eggs in recent days,” Lukashenko said.

A price cap tends to exacerbate such shortages because prices are based on supply and demand.

To meet demand, supply either has to increase or the price has to increase. A price cap therefore is effectively a cap on supply.

Inflation is however quite high in Belarus, but it’s nothing new. It crossed 100% in 2012, and was above 12% in 2016.

Interest rates were at 25% in that 2016, now they’re at 12%. They could have tried to increase interest rates instead, but their economy has contracted by 0.4% in the second quarter.

“From today, any price increase is prohibited. Prohibited!,” Lukashenko said, so potentially bringing that black market back to Belarus – especially if bitcoin is frozen at $20,000 there – which tends to be the chief cause of culturally accepted corruption.

Lukashenko himself however, or his son, probably won’t feel much the effects of inflation or any goods shortages as he is estimated to be worth at least $10 billion.

That’s according to cables released by Wikileaks that reveal in 2006 US diplomats believed that Alexander Lukashenko was the richest citizen in Belarus with a personal net worth that was at least $9 billion. The cables went on to claim that Lukashenko is the richest of all the oligarchs in Belarus.

Lukashenko has of course denied that he is one of the richest person in the world presiding over one of the poorest country with average wages in Belarus standing at $600 a month.