Devaluation in Russia has combined with continued monetary expansion in Belarus to produce a sharp increase in inflation during the third quarter. Monthly inflation for the first ten months of the year had ranged between 2.7% and 3.9%. However, following yet another round of emissions to finance the harvest collection, inflation rose to 17.6% in September, the highest monthly rise in four years, and then to 21% in October. Despite renewed efforts by the government to control key prices, this put the cumulative inflation rate for the first nine months at more than 80%, far exceeding the government's projected annual inflation for 1998. In the first week of October alone, prices of basic foodstuffs increased by up to 14%, while shortages of staple goods and imported products, particularly medical supplies, have become widespread and have triggered panic-buying among citizens.
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Consumer prices (% change) Month on month Year on year(a) 1997 Jan 13.3 49.5 Feb 6.6 53.3 Mar 2.3 53.7 Apr 4.3 58.0 May 5.0 64.8 Jun 4.5 68.4 Jul 1.4 67.1 Aug 1.0 66.6 Sep 5.0 71.8 Oct 3.2 74.9 Nov 1.8 71.4 Dec 2.3 63.3 1998 Jan 3.9 49.7 Feb 3.1 44.8 Mar 3.3 46.2 Apr 3.8 45.5 May 3.4 43.3 Jun 2.7 40.8 Jul 2.8 42.9 Aug 3.8 46.9 Sep 17.6 66.5 Oct 21.0 95.3 (a) EIU estimates based on monthly data. Sources: Belarus Economic Trends; press reports.
-- as the currency plunges
During the third quarter the Belarusian rouble continued to depreciate rapidly against the US dollar. After starting the year at BRb30,740:$1, the official exchange rate stood at BRb56,000:$1 by October 26th. The black-market exchange rate reached BRb180,000:$1 on the same day, having depreciated by over 13% in the preceding week. By November 28th the official rate stood at BRb78,000:$1. As reported by Belarus Economic Trends, the gap between the official rate and the parallel interbank market rate has widened considerably this year, from 35.1% at the end of January to almost 300% at the end of September, suggesting significant inflation and further depreciation.