04
Consumer
RUSSIA BEYOND THE HEADLINES WWW.RBTH.RG.RU
BOOKMARKS www.russiatoday.ru/business/news/15759 Inflation
to hit digits: Russian finance minister
SECTION SPONSORED BY ROSSIYSKAYA GAZETA, RUSSIA
www.russiatoday.ru/business/news/15319 Russia to
THE DAILY TELEGRAPH THURSDAY_NOVEMBER 15_2007 miss 2007 inflation target: economic minister
Opinion
The situation in the food market the pre-eminence of imported goods, However, the relatively small amount of duties on milk, vegetable oil and veg- ister Alexei Kudrin, seen as a staunch
started to give rise to concern in Sep- and 3pc on the growth of oil prices. In people blaming the authorities for the etables from the previous 15pc to 5pc. supporter of economic liberalism, these
How could
tember 2007, when prices for vegetable these respondents’ opinion, the influx problem can be explained by swift and Prime Minister Viktor Zubkov called for measures allowed the government to
oil jumped by 13.5pc and by 9.4pc for of petrodollars into the country coupled highly publicised measures taken by giving easier access to Russian mar- stem the growth of food prices without
this happen
milk, followed by a 7-8pc increase for with the absence of growth in the do- the government. In fact, their action was kets to the food products from neigh- breaching the rules of market economy.
dairy products. mestic agricultural production leads to aimed at removing all the three major boring agricultural republic of Belarus. “Freezing the prices by a government
now?
Explanations for these increases re- the prices’ growth. factors contributing to the price hikes The government also raised the cus- order would be a mistake,” Kudrin
flected the attitude of the people to the In fact, each one of these factors con- without reverting to the old-style Soviet toms duties for exported wheat and said in an interview to RIA Novosti new
current government. Only 8pc of those tributed to the problem, which quickly methods of confiscations and adminis- barley and subsidised loans for the agency.
DMITRY BABICH
polled by the VTsIOM sociological think became a political one as the Decem- trative pressure. food processing companies, thus en- “However, we have the right to soften
RUSSIAPROFILE.ORG
tank tied the sudden price hikes to the ber 2 parliamentary election approach- First, the Federal Antimonopoly Service couraging domestic food production. price shocks by sending messages
Specially for RBTH mismanagement or inaction on the part es. As 82pc of VTsIOM’s respondents started investigating regional food At the end of October, several major to food producers and food traders.
of the authorities. Indeed, 12pc tie the “noticed” a considerable soaring of trading companies in more than a half Russian food distributing companies The government fights not against the
problem to monopolisation of the mar- prices, this can grow into more trouble of Russia’s 87 regions, suspecting they agreed not to raise the prices until mid- fluctuations of prices in principle, but
ket by “greedy” traders and intermedi- at the elections for the ruling United had jointly agreed on a price hike. Sec- winter. against sudden shocks, when a price
aries, while 7pc blame everything on Russia Party. ond, the government lowered import In the opinion of Russia’s finance min- hike threatens to exceed 40pc.”
Prices Analysts at the Economic Development and Trade Ministry point to five Table manners Eating well takes planning
reasons behind the recent increases in basic consumer products
Making ends meet
Food for thought
in a dearer climate
Government’s three-year campaign
ANDREY NIKOLSKIY_OGONIOK MAGAZIN
to control inflation put under pressure
The increase in food prices
has ruined nearly three years
of the Russian government’s
Survey reveals what we think of infl ation and how we spend
efforts to curb inflation. It may
reach 11.5pc by the end of What did Russians think of infl ation two months before? What part of a Russian family’s income is spent on food?
the year, which is almost as
high as in 2004 (11.7pc), HIGH INCOME/MOSCOW. The Rylovs, entre- We eat a lot of dairy products, so we have really
when Russia was hit by a preneurs with a student daughter, spend 2,500- noticed the price hikes. For example, I used to buy
banking crisis. 2,800 roubles a week ($110) on food. cheese at 110 to 125 roubles per kilo ($5), and
Alexander Rylov: “We don’t spend much on food now it costs 180 to 200 roubles ($8). We don’t
MIKHAIL VOROBYOV
and buy almost no alcohol. I trained as a doctor want to exclude dairy products but may have to
VREMYA NOVOSTEI and try to make sure my family eats nutritiously. give up cheese and imported yoghurt.”
MOSCOW
A consensus forecast of ana-
lytical centres anticipates
11.4pc inflation. Finance SOURCE: WWW.WCIOM.RU
Minister Alexei Kudrin, dep-
uty prime minister of Russia, More than half (51pc) of Rus- to 38pc, prices for products get on food; 29pc spend 25- towns and villages. Most, 75pc
said inflation “may exceed sians say food price increases they usually buy rose by 20- 49pc; 60pc spend more than (from 57pc of the upper class
10pc”. seriously affect their budgets, 25pc; for 32pc, prices doubled. half on groceries; 18pc set to 86pc of the lower class),
But the Economic Develop- according to the All-Russian At the end of July, polls report- aside 75pc and more. think the price increases
AKEXANDR PETROV_OGONIOK MAGAZIN
ment and Trade Ministry be- Public Opinion Research Cen- ed average price increases of About half of those surveyed should not have happened.
lieves Kudrin is being overly tre (VTsIOM). The centre con- 10-15pc. These were particu- (52pc) will cut their food Some sociologists believe Rus-
optimistic. ducted a poll of 1,600 people in larly marked in dairy products spend, while 43pc said rising sians are more concerned by
A survey of the economic sit- 153 cities, towns and villages. and vegetable oil – with 74pc food prices will affect their rising prices than politics, and
uation since January, pub- Those who consider the infla- and 82pc reporting consider- budget but not nutrition. In they could become an election
lished by the ministry, says tion rate to be high rose from able price increases (three Moscow and St Petersburg, issue. VTsIOM believes the
that inflation will be 1.2- 52pc to 82pc. Fewer people months ago only 26pc spoke of 30pc will cut down food pur- government will try to keep the
1.6pc in October, or nearly believe it is moderate (to 13pc considerable dairy price in- chases, with 46-50pc planning prices down until after the
five times higher than the from 35pc) or insignificant creases). Only 5pc spend less to do so in large cities and elections, while the opposition
year before (0.3pc). (1pc against 8pc). According than one-quarter of their bud- towns, and 57-60pc in small will exploit the price rises.
If the ministry’s forecasts are
correct, consumer prices will
grow by 8.7-9.1pc from Jan- a favourable global market, increase in wages. They went dynamics slowed down to a significant rise in manufac- MEDIUM INCOME/PETROPAVLOVSK, RUSSIA’S dacha. If it was not for our homemade preserves,
uary to October. while the commercial at- up 21.7pc and 25.7pc, respec- 4pc from 4.3pc in the same turers’ prices and an in- FAR EAST. Valery Korolkov, a driver, and wife our budget would have collapsed. The price hikes
The current price dynamics traction of domestic produc- tively, in nominal terms, period in 2006. creased demand. Olga have six children, and grandchildren. Their have been the highest for sugar, bread and flour,
indicate that inflation will be tion plummeted because of compared with January- However, prices of certain Prices of petrochemicals budget is 8,000 roubles ($320). They will not cut and we like homemade pastries. We have already
much higher than 10pc. a more than 25pc decline in September 2006. goods grew as rapidly as food grew slower than last year, spending, but will try to supplement their income. cut down on fruit. If there are further increases,
According to the analysis of real prices over the past The fourth factor was “the prices. For example, prices of by 15.6pc compared with Olga Korolkova: “We grow vegetables at our we’ll try to find other sources of income.”
the Economic Development three years. consumers’ reluctance to construction materials grew 28.3pc. Petrol prices in-
and Trade Ministry, the ac- Besides, domestic produc- save money due to the nega- by 13.6pc, or 70pc faster than creased by 11.9pc (against
celeration of inflation which tion had been growing slow- tive profitability of the most the year before (8.2pc), due to 34.2pc last year).
-
started in April was due ly, in part because of a low or popular saving methods (de-
mainly to an 11.3pc increase zero profitability of some posits and foreign currency)
in food prices since January goods (butter and cheese). and the inability of most peo-
(5.9pc from January to Octo- The second is the influence ple (the low-income segment)
ber 2006). of global grain and food to invest their savings in
Consumer optimism
Prices of milk and dairy prices on the domestic prices property,” the ministry said,
products, butter, sunflower of milk and dairy products, also noting that the monthly
ANDREY NIKOLSKIY_OGONIOK MAGAZIN
oil, cheese and eggs soared by wheat, barley, and sunflow- wage was equivalent to 3.5 computers to fruit juice and
20-40pc in late September er oil, combined with a de- subsistence wages, and that
CONTINUED FROM PAGE 1
beer. In 2006, Russia came
and early October. clining competitiveness 70pc of people earned less The number of those in pov- out top in Europe for sales of
As a result, the rise of food against imported products. than 14,000 roubles ($567, or erty is constantly falling, washing machines and tele-
prices from January to Octo- The third was the rapid €392) per capita, or approxi- while the proportion of those phones; second after Germa-
ber 1 reached 8.1pc, com- growth of incomes because of mately the monthly aver- “well-off” – with enough ny for beer; and third for au-
pared with 6.7pc in the first age. money to cover all their daily tomobiles.
nine months of 2006. The final factor is a rapid needs – has increased from By 2008, Russian sales will
The ministry forecasts a 3-
Russian spending
growth of the money supply 22pc to 29pc from 2002 to eclipse European countries
4pc increase in food prices in due to an increased demand. 2006. in all markets except for au-
October.
It pointed to five main factors 60 pc
In the past two months, the The latest figures from the tomobiles; by 2011, they will
influence of monetary fac- Ministry of Economic Devel- be first even in this market.
spurring inflation this year. rough spending on foodstuffs tors on inflation was limited, opment suggest that over the The Russian consumer mar-
The first is the shortage of cer- and clothes out of Russians’ as evidenced mainly by the next three years real dispos- ket is eventually likely to LOW INCOME/KRASNOGORSK, THE MOSCOW Galina Belova: “I went to buy a bottle of cooking
tain foodstuffs (milk and overall expenses in 2001 relatively low dynamics of able incomes will increase by eclipse its neighbours not REGION. Vadim Belov is an electrician and his oil, two cartons of milk and some bread.
dairy products, butter and non-food prices and luxury 7.9-10pc annually. only in size. wife, Galina, works at a bakery. They spend 300- I expected the total to be 100 roubles ($4), so that
cheese) in some markets due
to a sharp decrease in imports 35 pc
foods. This level of growth would, According to experts ACN- 500 roubles (around $20) a week on food. They is how much I took. Then I saw the price for oil had
These prices are extremely in turn, increase demand for ielson, by 2025 it will be the will now be unable to afford fruit, will have to buy increased to 67 roubles, from 47. I ended up with a
and an increase in exports spending on foodstuffs and sensitive to an increase in de- products by 20-30pc each most expensive too.
-
less clothing and cut back on mobile phonecalls. bottle of oil, one carton of milk and half a loaf.”
(sunflower oil). clothes out of Russians’ mand and in the money sup- year, facilitating rapid ex-
Russian producers increased expenses in 2010 ply. From January to Sep- pansion in consumer mar- This story was initially pub- Photographs and case studies courtesy of Ogoniok Magazine
exports to take advantage of SOURCE: TROIKA DIALOG tember the non-foods price kets – from automobiles and lished in Vedomosti Daily www.ogoniok.com
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