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Free Market. All these factors make misleading the Soviet Union's claim to being free of inflation. Many prices are oppressively high for a country in which a working husband and wife average about $350 in income per month between them. Butter and sausages, for example, cost $2.05 per lb., and coffee more than $2.60. That is in state stores, where supplies often run short. Then consumers frequently turn to the free market, where farmers sell produce they have grown on private plots for whatever the traffic will bear.
Some farmers have grown relatively rich flying into major cities to hawk suitcases full of tomatoes at $4.68 per lb. in winter or strawberries and cherries at $2.34 per lb. in the spring. In addition to high prices, the drabness of many consumer goods is sparking a shoppers' rebellion. So many Soviet men turned up their noses at shapeless suits selling for $90 each that the government was recently forced to offer them at half price. Even then they did not move. Soviet buyers are turning increasingly to expensive imports: $18 cotton sports shirts from Iran, $50 platform shoes from Yugoslavia. Those are official prices; the black market is more costly still. For example, a Seiko watch that goes for $70 in the West brings $325, and a pair of genuine Levi's jeans $130.
Surge in Demand. Conditions are little better in the Communist countries of Eastern Europe. Poland, which boasts only a 1.9% annual inflation rate, has been forced to bow to public pressure and raise workers' wages 7% in each of the past three years. The rise has created a boom in demand that has pushed up many unofficial prices. Nearly all the country's food is sold on the free market. Last year the price of beef climbed 7%, potatoes 8.5%, sauerkraut 24% and pickles—a staple of the Polish diet—a walloping 33%.
In Czechoslovakia, which claims price rises of only 2% a year or less, consumers are balking at paying high prices for shoddy goods. Sales of Skoda cars have nosedived, and for the first time in the country's history, thousands of brand-new models are slowly rusting on factory lots. To stir consumer appetites, the government has permitted Western goods to be sold in state stores, but the price is high (nearly a month's salary for a pair of Austrian ski boots).
Yugoslavia, the only Communist country that allows a kind of free-market pricing, is the most prosperous-looking state in Eastern Europe. Its streets are crammed with Mercedeses and Fords, its shops filled with French perfumes. But the price of affluence has been steep. Last year the government candidly reported an inflation rate of 20%, about as bad as anything in the West. The key problems are the inefficiency inherent in the country's centralized planning system, rising wages and large imports from the West. Recently the Yugoslav mint reported that the cost of making coins now exceeds their value. A 20-para coin (worth about 1.3 cents), for example, now costs 32 paras to produce. As a result, Yugoslavia will soon probably convert entirely to paper money—provided, of course, that the price of paper does not scoot up.