Russia returns to price controls

Click to follow
RUSSIA'S Prime Minister, Viktor Chernomyrdin, has reimposed price controls on essential goods, backing away from his predecessor's radical free-market line.

His decree, announced yesterday by the Itar-Tass news agency, is Mr Chernomyrdin's first important policy move since taking office three weeks ago following the departure of Yegor Gaidar, a champion of unfettered market mechanisms. It comes a year after Mr Gaidar ordered prices freed and suggests a significant shift in Russia's attempt to curb inflation and calm growing public anger over economic hardship.

By the end of last year, inflation was around 25 per cent a month with the annual total estimated at more than 2,000 per cent.

A former energy industry bureaucrat, Mr Chernomyrdin is regarded as an efficient manager but far more sceptical than Mr Gaidar on the merits of a rapid transition towards the marketplace. Long opposed to any freeing of oil prices, he has sharply increased credits to the energy sector since taking office.

According to Itar-Tass, Mr Chernomyrdin aims to 'curb inflationary processes and unjustified growth in the prices for certain staple foodstuffs, consumer goods and services'. Profits will be limited to between 10 and 25 per cent of the value of sales.

Goods under 'complete state control' include basic foodstuffs such as bread, tea, salt, sugar, milk, butter, spirits and sausages, as well as some raw materials.

But Mr Chernomyrdin has made no move against his predecessor's other main reformist policy, a massive programme of privatisation, launched last month. Interfax news agency reported yesterday that President Boris Yeltsin had ordered the coal industry privatised by the end of March. Firms to be sold off include 19 mines.