Inflation Rises as Russia's Food Bans Push Up Prices
Published: August 22, 2014 (Issue # 1825)
Two weeks after their introduction, Russia's bans on Western food imports have sent prices skyrocketing in some far-flung corners of the country as prices began to rise across the board, raising fears that Russia's poorest citizens will pay for the Kremlin's reprisal to Western sanctions.
Some also worry about a destabilizing spike in headline inflation, hardly good news for an economy already in the throes of a sharp economic slowdown. Breaking typical season trends, inflation rose 0.1 percent in the week ending Aug. 18 after two weeks of no inflation at all, pushing up the yearly rate to 7.5 percent, according to data from Rosstat — far overshooting the Central Bank's target.
Certain regions have seen staggering price increases: The cost of chicken legs soared 60 percent in the Sakhalin islands of Russia's Far East, while meat prices in the nearby Primorye region climbed 26 percent and prices on some types of fish rose by 40 percent, newspaper Kommersant reported this week.
But Russia-wide price rises are much milder than in the Far East. The cost of chicken has risen 2.1 percent since the beginning of August, while pork rose by 0.8 percent, frozen fish by 0.5 percent, cheese by 0.2 percent and apples by 0.2 percent, according to Rosstat.
Russia's ban earlier this month on imports of beef, pork, poultry, fruit, vegetables and dairy products from countries that had targeted it with sanctions over the crisis in Ukraine caught retail chains and distributors completely by surprise, giving them little chance to adapt to the new reality.
"[The price increases] are due to the cost of suddenly changing procurement logistics … with barely any transition period," said Maxim Klyagin, a food market analyst at Finam Management.
Officials have assured the public that no price increases should ensue. Hammering home the point, Prime Minister Dmitry Medvedev said this week that the bans "should not significantly affect the situation on the food market" while ordering the government and regional authorities to "monitor the situation." Authorities have foisted masses of price monitoring paperwork on retailers, and reports of threatened countermeasures against price-gougers abound in the media.
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