Food Inflation is Rising and Packages are Getting Smaller

Food Inflation is Rising and Packages are Getting Smaller


Deputy Minister of Agriculture Oksana Luth commented on the risks of further growth of prices for basic foods such as bread, milk, sugar and vegetables.

The day before alarming information was voiced at the parliamentary hearings that food inflation continues to grow in Russia and this is only the start.

According to the Ministry of Economic Development, food inflation in Russia reached 11.7% which is a new record since December 2015. Experts extremely alarmed by the fact that 24 of the 29 food items included in the consumer basket to calculate prices have carried a price hike.

Last year the prices for bread rose by 10.1%, and this figure in the current environment is still acceptable. However, such a minimal increase was achieved only because the Ministry of Agriculture provided a subsidy for 1 kg of bread to sell products at a fixed price at retail.

Meanwhile, the price of sugar continues to grow sharply due to the fact that producers have raised the selling price by 30%. Buckwheat is 28% more expensive than a year ago. Vegetable oil grew in price by 15%, flour by 14.8% and milk by 12.9%. Beef prices have already raised by 16.7% for the year, chicken by 20.2% and rice by 10.9%.

The prices of vegetables that have already risen by dozens of percent, continue to increase. Carrots went up in price by 31.7% for the year, potatoes by 46.2%, onions by 11.1%, and cabbage by 177.5%. According to experts, prices will continue to grow until the new harvest.

Against the background of incessant price increases, food producers began to reduce the size of packages. Even now there are more and more products in stores that have shrunk in size. For example, Nestle began supplying the Rossiya chocolate weighing 82 grams, while previously the product weight was 85 grams. The volume of instant coffee decreased from 95 to 85 grams. The volume of yogurt Danone is now 260 grams, instead of 270 grams, as it was before, and the Heineken company now sells beer with a volume of 0.43 liters instead of 0.45.

Of course, a reduction in the size of packages cannot help to stop the instantaneous rise in food prices. Therefore, representatives of the relevant departments have already announced the measures that will be taken to contain them. For example, with regard to vegetable production, the emphasis will be placed on private farms. Moreover, already this year a federal project on the development of potato and vegetable production with additional support measures will be introduced for the organized sector. As for the growth of the cost of sugar, there is already an agreement with producers to set a certain price for retail sales. Recall that last year the state allocated 10 billion rubles ($86.14 mln) to support dairy cattle breeding. This year similar support measures are expected. In addition, subsidies will be made for bakers.

A poll conducted by the Higher School of Economics (HSE) in the fourth quarter of last year showed that only 8% of Russians say their financial situation has improved. The situation has worsened for 39% of respondents, and 29% expect further financial problems. Only 7% of respondents see positive changes in the economy. Despite the government's attempts to “freeze” one food market or another, store prices continue to rise. So, not all Russians believe in economic growth, which, according to the Ministry of Economic Development, is breaking eight-year records.

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