GUBAD IBADOGLU: PRICES WILL INCREASE, INFLATION WILL STRENGTHEN

    As a result of strategic reseraches it was dtermined that during six months of 2008 inflation in Azerbaijan reached 15%, Turan was told by the head of Economic Researches Center Gubad Ibadoglu. The highest inflation is in Baku and the lowest is in Mingachevir.
     According to him, on the results of June inflation was 08%, by 0,67% les as compared with May; in regions it lessened by 0,27%. The increase of prices for non-food goods is not so high. The most serious stimuli for
     inflation are the increase up to 80% of the expensive part of budget as compared with the past year, and the increase of money supply.
     Speaking about the monopoly on import of goods he said that it was caused high prices for imported goods. He considers that procedures during import of goods must be simplified and one-door system should be applied. If to eliminate corruption and monopoly prices may drop.
    
     On the other side, large local companies also play role in inflation. `Azersun` and other large holdings continue the policy of prices increase. They increase prices not at once, but gradually.
     Answering the question if the prices correspond to income of population Ibadoglu said that only rich people become richer.
     President very often increases prices for people who has official and unofficial income, but wages of 70% of population is on the level of average monthly wage or lower: doctors receive 92 manat, teachers - 143 manat, and the wage of employees of banks, financial and insurance systems is in average 600-700 manat.
     There is some part of population, only 6-7% whom inflation does not touch; 15% live in poverty, and situation of 25% of population worsened seriously. Inflation deteriorates the life of 42% of population. Social protection of population is necessary, particularly social addressed assistance. But it is so low that does not meet consumption of people (26 manat.) But this year the sum will increase a little.
     `We expected that wages of teachers and doctors, and basic part of pension will be increase this year. Average pension in Azerbaijan is 62 manat 90 gapik. This is lower that living standard. Minimum consumer basket is 108 manat 42 gapik, for children up to 15 years old - 98 manat 35 gapik, for pensioners - 80 manat 99 gapik. The size of pension should not be lower than 80 manat. Economic does not agree that rate of wage increase exceeds inflation. State budget has an economic classification. Four years ago wages comprised 35% of state budget, and now 21%. Despite the increase of the volume of state budget, expenses for payments of wages lowered.
     40% of budget is spent on investments. There is a principle in economy `one step ahead - two back.` Rate of increase of state budget does not influence the increase of wages. But the prices increase. The number of people working in budget sphere increases: 380,000 people work in education sphere. State budget provides 1 billion 115 million manat for it. More than 70% of this sum is wages. Increase of wages in this sphere means the increase of state budget by two times, but it is impossible. Concerning healthcare 59% of allocated funds are spent on wage.
     He forecasts that inflation will increase after presidential elections. Probably tariffs in electric energy and communal expenses will increase. The government has obligations to cover cost price of expenses in communal sphere, and at the same time it plans privatization of this sphere. One of necessary term is the change of tariff policy. The increase of prices in energy sector and on oil products, as well as gas is also expected, Ibadoglu said