|Key Words||Price Controls, Inflation, Prices, Profit, Costs, Shortages|
The Governor of the Krasnoyarsk territory in Siberia, like some other Russian governors, has introduced price controls in response to the inflation and panic buying caused by the financial crisis. For example, store-owners can only charge 10 percent more than they pay for food from wholesalers or farmers. The prices of meat, fish, bread, flour, cereal, pasta, beverages and coal are now controlled. Wholesalers need permission to raise prices, and they have been told that they should earn only 2 percent profit. Tax police enforce the measures through fines.
Businesses complain that their lower profits hinder their ability to deal with the turbulent economic situation. They have difficulty covering their other costs such as utilities and security. They are cutting costs by reducing hours of work. Consumers face shortages because producers are sending their goods to regions where there are no price controls. However, the Governor of Krasnoyarsk has stated that these measures are only short-term.(Updated November 11, 1998)
|Source||Michael R. Gordon, "One Patch of Russia's Economic Crazy Quilt, Growing Increasingly Tattered", The New York Times, September 23, 1998.|
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