Food prices continue to rise. At the same time, the real reason for the rise in prices is often not sanctions at all, but the greed of large manufacturers. However, other equally important factors also play a role: a fall exchange rate of the ruble and the severance of established ties with foreign suppliers.
According to Rosstat, there is no increase in prices in the country. According to official data, the consumer price index in August compared to July even decreased by 0.06%. If you take a break from the bureaucratic writings and look into any supermarket near your home, then it’s easy discover: the given figures have little relation to reality. For example, grain bread produced by one of the large domestic holdings, which I bought for 61.99 rubles just a few weeks ago, now costs 65.99 rubles. A pack of butter, which cost me 159.99 rubles back then, now costs 179.99 rubles. It is noteworthy that in both cases the retailer sold the oil at a discount, the stated percentage of which did not change.
At the same time, market participants warn: the main rise in price has not yet begun. First, autumn indexation will take place, and then products, as usual, will rise in price for the New Year.
Sanctions, complex logistics, fallen ruble – these factors are traditionally used to explain the rise in food prices. Indeed, all this takes place. However, it is unlikely that the sanction pressure, which has been going on for a year and a half, can explain the rise in price of the same sunflower oil – a 100% domestic product.
Thus, in the first week of September alone, in most regions of the country, sunflower oil prices increased by 1–6%, Rosstat notes. Apparently, this is just a warm-up for now – on world markets over the summer, oil prices soared by about a third. Add to this the modest harvest of this year (cold weather in the Volga region, heavy rain in the Far East), and now there is a forecast: by the end of the year, oil prices may rise by another 10–15%.
The largest producer of sunflower oil in the country is the Rusagro Group of Companies, controlled by the oligarch Vadim Moshkovich. The company’s revenue at the end of last year amounted to just over 240 billion rubles, which is 8% more than a year earlier. Another major player in this market is Efko JSC. In terms of revenue in 2022, the company became the industry leader, earning 277 billion rubles – a quarter more than the year before. Apparently, the agricultural oligarchs are now setting their sights on new records.
The situation is different with bakery products. The Ministry of Agriculture assures that everything is fine with the harvest and grain prices will not be affected “significant impact on the cost of bread and bakery products”. At the same time, the ministry does not say that fuel prices have a truly significant impact on the cost of bread. “Its share in the cost of a loaf of bread reaches 38%”explains the President of the Russian Union of Bakers Alexey Lyalin, adding that in the last two months alone, wholesale prices for diesel fuel have increased by 50%. As a result, just from the beginning of the year, bread prices increased by 5.61% compared to the same period in 2022. Apparently, we should expect even more price increases soon. Last spring, the government decided to pay state subsidies to bakeries: 2.5 rubles for every kilogram of bread – the money was allocated in exchange for producers’ promise not to raise prices. Bakers asked the Ministry of Agriculture to increase the amount of subsidies to 7.5 rubles, but instead the payments were canceled altogether. According to information from the Bakers’ Union, this decision was motivated by a lack of funds in the budget. Bakers also lost subsidized loan rates for the purchase of flour from the federal budget.
Poultry prices continue to rise. In early September, the Cherkizovo company announced a 6.5% increase in turkey prices. And despite the fact that poultry prices have been rising since June 2022. Manufacturers cite an increase in the price of hatching eggs by approximately 19% as the reason for this. The fact is that a significant proportion of eggs are imported from abroad. The breakdown of previous supply chains and the fall in the ruble exchange rate led to an increase in prices.
“Over eight years, consumer prices for chicken meat have increased by approximately 45% with food inflation of almost 60%. Pork prices have increased by a ridiculous 15% – and this has happened in eight years. That is why broiler meat and pork remain the most affordable and sought-after animal proteins.”notes the head of the executive committee of the National Meat Association Sergey Yushin. Let us recall that in mid-August the Federal Antimonopoly Service sent inquiries to the three largest poultry meat producers in order to check the validity of the price increase. However, apparently, this check is more of a decorative nature. According to the same Sergei Yushin, regulatory authorities (including the FAS, the Ministry of Economic Development and the Ministry of Industry and Trade) regularly “they receive detailed information about the reasons for the price increase and no one questions the current dynamics.”
However, the chicken producers themselves are not poor at all. For example, “chicken king” Victor Nauruzov, which controls the largest poultry producer in the country, the GAP Resurs company, recently gained control over new assets: the Sheksninsky bakery plant and the Sheksninsky poultry factory. Also, the media has repeatedly reported that Mr. Nauruzov has good connections in the largest banks – Sberbank and VTB. So it’s a shame to complain about the lack of support for chicken producers.
Another bad news is that since September, tea and coffee prices on the wholesale market have risen by an average of 6–9%. This means that, depending on the appetites of retailers, prices for the end consumer may increase by 15–20%. The reason for the rise in price is a 20 percent increase in prices for raw materials on world markets since the beginning of the year, associated with drought in Asian countries and West Africa.
Carbonated drinks and juices have also increased in price. In this case, the reason was the weakening of the ruble. “Almost all soda produced in Russia is based on concentrate, which is imported from abroad. That is, both foreign and domestic producers import a fully assembled drink without water, and dilute it at the bottling site.”explains an independent retail market expert Alexander Anfinogenov.
The Ministry of Economic Development issued its forecast for the growth of real incomes of the population – Maxim Reshetnikov’s department believes that by the end of the year, Russians will become richer by 4.3% against the previously predicted 3.4%. Salaries will grow not by 5.4%, as previously predicted, but by 6.2%. However, it is worth noting that even these rosy forecasts still do not catch up with inflation, which is expected at 7.5%.
As HSE experts stated in their study, the weakening of the ruble, if it did not have a direct impact on rising prices, then obviously accelerated the overall growth processes. In general, according to HSE estimates, over the past year the most significant increase in prices occurred in the catering sector; prices for seafood, tobacco products and paid services also increased.
A significant increase in prices due to exchange rate fluctuations is expected not only in food markets. A weak ruble will traditionally have a negative impact on pricing in the electronics and household appliances market. “Now, given the growth in demand, inventories are probably gradually decreasing. Therefore, to a certain extent, starting in July, we see this increase in prices due to the exchange rate,” stated HSE expert Igor Safonov.