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28/08/2016

Self-imposed food sanctions have already caused inflation in Russia

Agriculture & Food

Self-imposed food sanctions have already caused inflation in Russia

Looks like the Soviet Union. Russian consumers can expect empty shelves in supermarkets after the government's self-imposed EU food import ban. [Shutterstock]

Russia’s embargo on imported Western food is already hitting consumers’ pockets, as food prices in Moscow shops have jumped by up to 6% in just a week, according to the BBC.

Moscow officials say frozen fish prices in the capital’s major supermarkets have risen by 6%, milk by 5.3% and an average cheese costs 4.4% since the 7 August ban took effect.

Russia has banned imports of those basic foods, as well as meat and many other products, from Western countries, Australia and Japan.

The ban was imposed in response to Western economic sanctions against Russia, over its annexation of Crimea from Ukraine, and a pro-Russian rebellion in eastern Ukraine, which Western capitals accuse Moscow of fomenting.

Elsewhere, on the island of Sakhalin, officials say the price of chicken thighs has soared 60%. Before the sanctions these were among the cheapest and most popular meat products in Russia. In the neighbouring Primorye region fish is now reportedly 40% more expensive than just a few weeks ago.

According to the BBC, Russian social networks have plenty of pictures showing empty shelves in Moscow supermarkets, where foreign varieties of cheese and yoghurt used to be abundant.

But authorities say stocks imported before the ban are large enough to last for a month or more. By that time, European goods will have been replaced by supplies from Brazil, Argentina, Turkey or Egypt, they say. However, other experts say those new supplies will not be enough to prevent further price rises.

“The Brazilian meat price for September is already 20 to 30% higher than it was in August. Don’t set your hopes on Brazil, this is just the beginning of a general price rise,” Sergei Yushin, head of Russia’s Meat Suppliers’ Association, told the business daily Vedomosti.

Reminding of Soviet times

The Russian authorities have already promised to monitor food prices closely and punish anyone who tries to profit from the situation illegally. A Soviet-era word – “spekulyanty” – is being used again. It means black market speculators.

Smuggled Western goods were sold at inflated prices in the Soviet Union, where many basic foods and other goods were in short supply. Some liberal economists in Russia warn that if the state tries to regulate food prices again, the country could face real shortages reminiscent of Soviet times.

Some food items, notably pork from Ukraine and the EU and Polish apples, were banned even before 7 August and as a result, pork prices have risen some 20%.

Background

The crisis in Ukraine erupted after its former President Viktor Yanukovich cancelled plans to sign trade and political pacts with the EU in November 2013 and instead sought closer ties with Russia, triggering protests that turned bloody and drove him from power.

Moscow annexed Crimea in March following a referendum staged after Russian forces established control over the Black Sea peninsula in the biggest East-West crisis since the Cold War.

Pro-Russian militants control buildings in more than ten towns in eastern Ukraine after launching their uprising on 6 April. On 11 May pro-Moscow rebels declared a resounding victory in a referendum in Donetsk and Luhansk, which the West called illegal and illegitimate.

The situation has worsened since then. In July, EU resolve to punish Russia strengthened after the downing in Ukraine earlier this month of a Malaysia Airlines passenger plane, killing all 298 people on board. 194 of the passengers were from the Netherlands.

Western leaders say pro-Russian rebels almost certainly shot the airliner down by mistake with a Russian-supplied surface-to-air missile. Moscow has blamed Kyiv for the tragedy.

Further Reading