Russians are grappling with a sharp increase in food prices, presenting a significant challenge to President Vladimir Putin as he navigates the ongoing conflict in Ukraine and strives to maintain domestic stability. The Kremlin faces growing pressure to address the escalating cost of living, with everyday essentials experiencing dramatic price hikes.
Data released by the Federal Statistics Service revealed a stark picture. Potatoes, a staple in the Russian diet, are now at least 73% more expensive than at the beginning of the year. Butter prices have surged by over 30%, while onions, beets, sour cream, milk, bread, and fish have all seen increases ranging from 12% to 25%. This surge follows existing inflationary pressures, meaning many Russians are facing significantly reduced purchasing power.
The impact on ordinary citizens is profound. Tatyana, a 72-year-old resident of Kirov, reported that food now consumes two-thirds of her pension, up from approximately half previously. She has been forced to curtail purchases of more expensive items, such as exotic fruits, and for the first time since the 2022 invasion of Ukraine, will be unable to afford the traditional New Yearâs treat of red caviar. Her experience reflects a wider trend of hardship across the country.
The Kremlin is acutely aware of the public discontent. Reports indicate that President Putin received numerous complaints about rising food prices during a recent televised citizen call-in event. Consequently, various government bodies, from the Ministry of Agriculture to the Prosecutor Generalâs Office, are scrambling to find solutions.
The Bank of Russia, already having raised its key interest rate to a record high of 21% last month, faces a formidable challenge. Policymakers acknowledge the ongoing upward inflationary pressure, hinting at further interest rate hikes despite forecasting inflation of 8%-8.5% for 2024. However, this approach may have limited effectiveness in controlling food prices directly.
In Kirov, located approximately 1000km northeast of Moscow, Tatyanaâs observations suggest the national statistics may underrepresent the severity of the situation. She reports that essential items like milk, butter, eggs, and bread are at least double the price they were last year.
The governmentâs response has been multifaceted. Prosecutor General Igor Krasnov has launched an investigation into price gouging by milk producers. Prime Minister Mikhail Mishustin instructed the Ministry of Agriculture to guarantee sufficient fruit and vegetable supplies, while Deputy Prime Minister Dmitry Patrushev ordered daily monitoring of the food market and the implementation of stabilising measures.
However, some analysts, like Vladislav Inozemtsev, special adviser at the Middle East Media Research Institute, are sceptical of the government's actions, suggesting the focus on producers and traders is a deflection from the underlying impact of the war. He points to the similar price increases in 2007, when such strong government intervention was absent.
While the Bank of Russiaâs actions have had a marginal effect on overall inflation, the impact on food prices is less pronounced. Food inflation remained above 9% in October. Several factors contribute to this, including rising logistics and production costs, increased prices for raw materials, livestock feed, and fuel, as well as the weakening rouble and disrupted supply chains due to sanctions.
The war in Ukraine has exacerbated the situation, particularly affecting agriculture. Minister of Agriculture Oksana Lut estimates a labour shortage of 200,000 workers in the sector, compounded by unpredictable weather patterns impacting harvests. This has increased Russia's reliance on imports, with recent purchases of butter from Turkey and the UAE, and Azerbaijan's assistance in resolving an egg shortage earlier this year. Despite recommendations from various ministries to reduce prices, the ultimate solution, according to political analyst Tatiana Stanovaya, remains government pressure on producers and retailersâa tactic with limited long-term success. The crisis highlights the complex interplay between geopolitical tensions, economic policy, and the daily lives of ordinary Russians.