Parviz Heydarov writes…
Every year, at the end of the summer season and during the first month of autumn, the consumer price index, i.e. the inflation rate, accelerates and increases in price. This sometimes manifests itself abruptly and, in some cases, secretly. The same trend was observed in August of this year.
In August 2024, compared to the same month last year, inflation was recorded at 3.5%, including 3% for food products, beverages and tobacco products, 1.8% for non-food products and 5.6% for paid services provided to the population.
Overall, the consumer price index rose by 0.4% over the previous month, and in the January-August period it rose by 1.3% compared to the corresponding period of the previous year. For comparison, it should be noted that in July the consumer price index was 0.9% compared to the previous month, and in January-July it was 1% compared to the same period of the previous year.
At first glance, the pace is not very high. However, in terms of the effects and pressures caused by the downturn factor, the acceleration of inflation, even if it is slight, should not be accepted as normal and should not be welcomed. It should be noted that fuel and internet prices have increased in the summer. And in particular, I wrote that, based on the known changes in fuel tariffs, it is possible that they will not come into effect immediately, but in the fall. That is, an additional boost to inflation may come, even if it is slight.
It is true that there is no serious negative reaction or resonance in the social aspect. From this point of view, one can cite as an example the rate of growth of the population’s income, to be precise, the indicator of the average monthly nominal wage.
Thus, according to official statistics, the average monthly nominal wage of wage earners in the country’s economy in January-July 2024 increased by 8.3% compared to the corresponding period of the previous year and amounted to 1,002.4 manats, i.e. the aforementioned 1.3%. The % at the end of the first 8 months is considered to be above the inflation rate. In January-June of the year, this indicator increased by 8.8% and amounted to 1,002.8 manats. The apparent reduction is not serious.
By the end of the year, the average monthly nominal wage will be slightly higher. Given that there is talk of an increase in the minimum wage, and if this occurs during the remainder of the current year, the average monthly nominal wage for 2024 will show an increase of more than 10%.
But…
The main thing is the structure of the population’s expenditures, that is, the question of what exactly the available funds spent on goods purchased in the retail network are spent on…
Let’s look at the numbers: in the first 8 months of 2024, 50.8% of the funds spent by the country’s population were spent on food products, 4.5% on beverages and tobacco products, 13.0% on textiles, clothing and footwear, and 5.7% on gasoline and diesel, 4.9% was spent on electrical appliances and furniture, 2.2% on pharmaceuticals and medical supplies, 1.2% on computers, telecommunications and printing equipment, and 17.7% on other non-food goods.
In the first six months of the year, funds spent on food products in the retail network amounted to 50.6%. As can be seen, the amount of funds spent on food in the population’s expenditure structure has increased.
Thus, as I mentioned in one of my previous posts, the average monthly nominal wage indicator does not and cannot mean much. Firstly, we are talking about the sum of wage funds plus taxes and all kinds of social payments, an indicator that is obtained by dividing it by the number of existing employees. Secondly, the number of employment contracts concluded as a result of the discovery of hidden jobs also affects the average monthly nominal wage indicator. That is, it is important to keep this in mind.
Therefore, even if the average monthly nominal wage index is steadily increasing, this should not discourage the continuation of the policy initiated in 2019, despite the current pace of the consumer price index. Especially if there is even a slight acceleration in such a pace…
In general, if the growth rate of the average monthly nominal wage indicator is higher than the consumer price index, it cannot be considered a serious reference source in the above-mentioned matter. In short, wages and pensions should be increased.
