MOSCOW: Lots of things freeze in Russia’s bitterly cold winters, but not usually food prices, yet that is exactly what top supermarket chains are doing to protect the poor from galloping inflation.
The plunging rouble and a Russian embargo on European Union and US food products in retribution over Ukraine sanctions has resulted in prices for many goods skyrocketing.
The ACORT trade association, which includes major supermarket chains such as Magnit, X5, Auchan, Lenta and Metro, announced last week that it was freezing prices “on more than 20 socially important items of basic necessity for two months”.
The supermarkets said they hope to “contribute to a stabilisation of the situation on the food markets in the interest of consumers” and called on suppliers to help in the effort.
Freezing prices may also be in the interests of the supermarkets although it will eat into their profits, analysts say, as it may help them escape worse measures from the government.
The list of products covered has not been announced, but the newspaper Vedomosti reported that it will include meat, fish, milk, sugar, salt, potatoes, cabbage and apples.
According to official statistics, food prices rose by 15 per cent in 2014 and increases have accelerated since the start of the year.
With it taking nearly twice as many rouble s to buy a dollar, prices for imported goods have soared.
“I see how much prices are rising every day and sometimes it makes my hair stand on end,” said Maria Bunina, a 62-year-old Moscow pensioner.
“I usually fill up a trolley,” she told AFP. “A year ago that cost 1,200 rouble s (US$19.50) and today it costs 2,500 roubles.”
The same goes for medicines, most of which are imported. Prices have jumped by as much as third.
A group that unites more than 730 pharmacies has said they will join the initiative by freezing prices on vital medicines for chronic illnesses that are common among lower income groups.
Food and medicine prices are a sensitive issue for Russian President Vladimir Putin, who returned to the Kremlin in 2012 on campaign promises of improving social welfare.
With the rouble having lost nearly half of its value against the dollar, in large part due to the collapse of the global price of Russia’s key export earner oil, the government is strapped for cash to fund welfare programmes.
Instead, the authorities have turned to a series of highly-publicised inspections to ensure shops and market traders are not price-gouging.
Spectacular cases of a 163 per cent jump in cabbage prices, the cost of cucumbers rocketing 478 per cent and tomatoes 338 per cent were uncovered.
Faced with the prospect of greater crackdowns, inflation-linked losses from freezing prices on some basic necessities may be the ‘lesser evil’, according to economists at Alfa Bank.
They called the initiative “an attempt to show a united front in a context of rising pressure from the government to contain inflation”.
Meanwhile, analysts at VTB Capital said they believe “country-wide price controls are unlikely”. — AFP