| According to TradingEconomics website, the inflation rate in Russia was last reported at 9.5 percent in March of 2011. The figure, hardly perceptible for well-paid consumers, produces a shock to the majority of the population. However, for a foreigner coming to Russia it would seem rather exaggerated to consider this percentage crucial. Indeed, have a look at the following statistics: From 1991 until 2010, the average inflation rate in Russia was 175.36 percent reaching a historical high of 2333.3 percent in December of 1992 and a record low of 5.5 percent in July of 2010. Who ever claimed we would suffer from a 9.5 percent’s inflation rate? You’d rather say it’s unfair to look down on such a small figure. But what’s happening in fact? Let’s account for the situation. Inflation rate refers to a general rise in prices measured against a standard level of purchasing power. The most well known measures of inflation are the CPI which measures consumer prices, and the GDP deflator, which measures inflation in the whole of the domestic economy. So what does it all stand for? The inflation rate is in itself a very relative index. It does not show the prices, nor does it reflect people’s average income. The inflation rate serves for indicating the factual gap between the cost of living and the ability to correspond to this cost. In its turn that means you can buy less than you could some time ago with the same amount of money. However horrible it might seem, but inflation is typical of all countries and actually is one of the characteristic features of market economy. Deflation (which is the opposite for inflation) occurs so rarely that you can really count such cases with the fingers of one hand (probably the most shining example is the Soviet Union times). Economics suggests several reasons for inflation, among them is the increase in public expenditures which is paid off with the help of currency issue (for a better account read at http://en.wikipedia.org/wiki/Inflation#Causes). That is why the real purchasing power is decreasing and people can’t afford what they want. In general, salaries are typically adjusted annually in low inflation economies. In Russia, however, this adjustment system is not working effectively. A 30%-increase in a teacher’s salary won’t cover the 9.5% inflation rate because the prices are too high for a salary like this. One would say the government’s current policy has no operative tools to improve the economic situation, but we shouldn’t forget, improvement isn’t a matter of a few days (even not of a few decades in some cases) while going all to smash was popular in the early nineties. | 
