Price Controls, Repressed Inflation, and Monetary Overhang in the Late Soviet Economy

Late Soviet inflation is easy to underestimate if only official price indices are read. Between 1981 and 1988, official retail prices rose by about 0.6% per year, yet household balances, forced saving indicators, inventories, and subsidy data suggest a less stable economy underneath the posted prices. This paper studies that gap as repressed inflation: pressure that administrative prices kept out of the official index, but not out of the economy.

The evidence is assembled from official-data compilations, Soviet household-balance reconstructions, and the shortage-economy literature. I do not estimate one exact "true" inflation rate. Instead, I show that several independent signals-monetary overhang benchmarks, Kim's household overhang series, falling inventories, and large price subsidies move in the direction expected under controlled-price disequilibrium.

A small OLS exercise is included only as a diagnostic, since the sample is too short for causal inference. The main conclusion is that late Soviet price controls postponed visible inflation by shifting adjustment into queues, forced saving, scarcity, and fiscal subsidies. The 1991-1992 price break then looks less like a sudden creation of inflation than a partial release of pressure accumulated earlier.