A break-in at a small food store in the Russian city of Yekaterinburg wouldn’t usually make headlines around the world, but this time was different.
CCTV footage from the store, Dairy Place, in early November appears to show the door being smashed and one person rushing over to empty the cash register. The other person makes a beeline for the fridge, plundering 20 kilograms of butter from the chiller, Russian media reported.
The owner of the store said on Telegram that the heist showed butter was now like “gold,” according to a Google translation. CNBC could not independently verify the footage.
Dairy Place is not the only victim of butter thefts, with a recent spate of similar incidents prompting some stores to lock the product in containers. A standard 200g stick of butter now costs around 200 rubles, or almost $2, with prices up 30% since December 2023, according to data from state statistics service Rosstat.
The theft of such a basic product has drawn attention to rampant price rises in Russia.
“The cost of basic foods has been growing for the last three years. It is getting worse day by day and sped up, especially this year,” Stanislav, a Moscow resident, told CNBC.
“It depends on the type of food, of course. Some prices of goods go down, for example, buckwheat. It had a higher cost in 2020 during the Covid-19 pandemic, but now it is three times lower. But this is the single example of a price decrease. All other food prices are growing. I think it is about 10%–40% per year,” he added.
Russia’s annual inflation rate came in at 8.5% in October, well above the central bank’s target of 4%. It prompted the bank last month to raise interest rates to 21% — their highest level in more than 20 years — and a further hike is expected in December.
High interest rates have shown few signs of dampening price growth so far, with food inflation in particular keenly felt by shoppers. Dairy products, sunflower oil and vegetables (especially potatoes, with prices up 74% since December last year) are among the items seeing ongoing upticks in price, according to weekly data from Rosstat, as demand outstrips supply.
Anton Barbashin, a Russian political analyst and editorial director of the journal Riddle, said price rises were inescapable for most citizens, telling CNBC that “literally half of all Russians spend most of their earnings on food, so they feel inflation the most.”
“Product inflation is now the greatest driver for inflation, as such. So prices for basic goods, food and other personal items are increasing the most,” he noted.
“So far, the strategy for most Russians has been to downgrade their consumption patterns, opt for lower-quality goods. Postpone any long-term purchases. However, this stress is not spread out evenly. Moscow is still barely feeling the troubles. The most hit are [people in] the smallest towns and rural areas,” he noted.
‘Butter for guns’
Inflationary pressures in Russia, and indeed throughout Europe, have been exacerbated by Moscow’s ongoing war against Ukraine, with food costs rising as a result of supply and labor shortages, higher wage costs, sanctions, and increased production costs.
These have accompanied Russia’s shift to a war-orientated economy since its invasion of Ukraine in February 2022, with a massive increase in state defense spending and domestic production of military hardware taking priority over agricultural production. The Russian economy has fared better than expected since the start of its invasion of its neighbor, with the International Monetary Fund expecting it to grow by 3.6% this year.
Russia’s leadership has looked to dodge criticism for the price rises, blaming “unfriendly” countries (that is, Ukraine’s allies) for the conflict, sanctions and supply shortages.
Russian President Vladimir Putin has denied that Russia has exchanged “butter for guns,” as he defended higher defense spending.
“To say we spend too much money for guns and forget about butter — this is not so. I would like to underscore that all, exactly all the earlier announced plans of development and achievement of strategic objectives and all the social commitments assumed by the state towards the population — all of them are being performed to the full extent,” Putin said at a plenary session of the Valdai Discussion Club in October, the Tass news agency reported.
While many Russians have linked the war and inflation, it’s risky for ordinary citizens to openly criticize the invasion — or “special military operation” as Moscow describes it — as any perceived “discrediting” of the army can be punished with fines and prison.
Stanislav, who preferred not to provide his surname given the risks associated with criticism of the war, said he knows that the price rises are linked to the invasion of Ukraine, but said he doesn’t have “too many conversations with other people because it is dangerous to say something true in Russia.”
“Smart people ... understand what is happening with the economy, but most people accuse foreign ‘unfriendly’ countries [of being to blame for the price rises]. This official term ‘unfriendly country’ is often used in bills and propaganda,” he said.
Despite deflecting responsibility for price rises away from itself, and the war, the Kremlin has nonetheless looked to reassure the public it is acting on product shortages.
Last year, a shortage of eggs — and price rises of more than 40% — prompted the government to remove import duties on the product. The administration said it would buy eggs from “friendly” countries and, in the first quarter, Russia imported 235 million eggs from Belarus, Azerbaijan and Turkey, Russian media reported.
This October, the government said it would monitor butter prices and would support a “systemic increase in production” as the dairy industry continued to struggle to meet demand.
Barbashin, who no longer lives in the country, noted that Russia’s propaganda machine means there is little sign of mass discontent with the government or president over stubborn inflation.
“It has always been a great accomplishment of the Kremlin to separate the issue of Putin’s policies and individual struggles of the Russians,” he said.
“Naturally, it is not a universal rule, but so far we’re not seeing these struggles translate into blaming the president or the war.”
He said that, so far, propaganda was keeping mass dissatisfaction at bay, and some Russians just think, “it is war and war is costly.”
“But the speed of economic change in Russia is increasing, so we might expect [an] increase of those who want this war to end,” he said.
“We shouldn’t also discard that [the] Kremlin is blaming Western activities and sanctions for economic issues in Russia, offering an easy target for Russians to blame.”
source: cnbc.com
