Belarus official inflation breaks 10-year record

MINSK: Consumer prices in Belarus have shot up by 36.2pc since the start of the year, the highest inflation rate for a decade, officials said on Thursday.

At the same time, the republic has decided to lift cost restrictions off some basic goods that could previously only be sold at state-mandated prices, Economy Minister Igor Fomin told reporters.

"The ministry has decided not to extend the price freeze," Fomin said.

"It is important to understand in this situation that administrative regulation has to be precise and flexible," he said.

Prices grew as much as two-fold in the first half of 2011 on cars, fuel, and transportation. "In the past 10 years it is the biggest inflation rate in Belarus," said national statistical committee deputy chairman Irina Kangro.

Belarus faces the dual challenge of fighting inflation while at the same time reviving a stalled business sector that suffers from a lack of incentives to supply stores at the prices set by the state.

The former Soviet republic's currency crisis was sparked last year by pre-election spending promises from President Alexander Lukashenko and a subsequent jump in the price Russia charges for its oil.

Belarus was forced to devalue its currency by 36 percent in May and further inflation expectations have hurt business transactions at official rates.

The crisis contributed to weekly demonstrations and the arrest of hundreds of protesters in incidents that have further isolated the ruling regime from Europe and complicated its relations with neighbour Russia.

Belarus this week nominated seven top state-held companies for sale to Russian buyers in a bid to meet the terms of a $3.5-billion bailout loan it will receive from a Moscow-led club of former Soviet nations over three years.

But Belarus Prime Minister Mikhail Myasnikovich admitted this week that some Russian companies involved in takeovers appear to be stalling as the state of Belarus' economy deteriorates further.

The National Bank of Belarus last week established one of the world's highest interest rates by hiking its own main benchmark by another 2.0 percentage points to 20 percent in a bid to battle inflation.

Officials on Thursday refused to speculate about the country's annual inflation rate for 2011. The last official estimate said it would come in at under 40 percent.

Copyright AFP (Agence France-Presse), 2011