Kolos I., Yerysh L.

Donetsk National University of Economics and Trade

named after M. Tugan-Baranovsky

INFLATION IN UKRAINE IN CRISIS

Inflation is one of the most pressing problems of economic development of any country. More urgent the problem is found in the financial crisis, when the effects of inflation increased destabilization of the hryvnia (UAH), the loss of depositor confidence in the banking system, the decline of key sectors of national economy and soaring unemployment.

Inflation is a versatile, complex process, which clearly reflects the main problems and weaknesses of the economy. It is a process of general price level of growth in the state due to violations of the law of money circulation. Inflation occurs when in the turnover there is an excessive amount of money.

This situation leads to their depreciation, money are getting "cheaper", and the prices are an impetus to growth. Inflation is a broad social and economic phenomenon, born in the production of imbalances in different areas of the market economy.

In crisis conditions of economy inflation has several distinguishing characteristics: if previously the inflation rate was of a local character, now it is universal, if previously it had a periodic character, now it is chronic, inflation at the present stage is influenced not only by the money factor, but also by many others.

The causes of inflation in Ukraine have to be look for in a cash flow strain, namely, improper conduct of monetary policy, "dollarisation" of the economy, devaluation of the hryvnia, limited exports of metallurgical products (which gave a significant inflow of foreign currency deficit, of which depreciated hryvnia). Also, the situation in the country is deteriorating due to a political fragmentation, so no necessary measures were taken in time. Although the main inflation factors are concentrated on the national economy, but there are those that are outside it. This refers to the transfer of inflation channels of world trade, when prices on raw materials or energy stimulates the mechanism of inflation costs.

Increase in fuel prices, imported by Ukraine from the Russian Federation, also had a significant impact on strengthening of inflationary processes in Ukraine.

Inflation affects all socio-economic spheres of life. The overall economic situation was affected by the crisis of export-oriented industries that have traditionally been a source of filling the state budget.

The financial crisis not only affects the world economy, but also every citizen of Ukraine in particular. Under the pressure of the situation in Ukraine "Gold Rush" began. The increased interest in gold provoked a significant decrease in confidence in the deposits, as well as the reluctance of people to invest in securities. Ukrainian consumers were not stopped, even over-bank gold price, which in some cases reached thousands of dollars per ounce. Precious metals were a more reliable way of investing money.

The main ways that can stabilize the economy as a whole and to reduce inflation is to adopt anti-crisis measures in the following areas: promoting the production, price controls, the review of fiscal policy in terms of costs, providing government and corporate financial liabilities on external loans, stabilizing the national currency and a clear, predicted exchange rate policy.

Thus, to overcome the economic crisis in the first place, it is necessary to stop inflation and the devaluation of the hryvnia since inflation has a negative effect on real incomes, savings, living conditions, social groups, etc. Whatever the reason of inflation, is it devalues the budget revenues, and is accompanied by its scarcity. In order to avoid a deep recession, the national economy and the massive increase in inflation during the crisis, it is necessary to use the widest possible tools, starting with the refinancing of commercial banks to control rates and tight fiscal policy of the government.