Butter prices are rising in Russia amid rising inflation in the military economy
Russian President Vladimir Putin says Russia's military economy is well-balanced to supply both guns and butter, but the price of butter itself is now rising as rising inflation distorts parts of the economy.
The price of a block of butter rose by 25.7 percent since December, according to the state statistics service.
Reuters reporters obtained purchase invoices showing the price of a package of high-end Brest-Litovsk butter in Moscow rose 34 percent since the start of the year to 239.96 rubles ($3.41 Cdn).
“Armageddon with butter is on the rise; we won't be surprised if butter repeats last year's situation with eggs,” warned economists on the popular Russian MMI Telegram channel, referring to the previous spike in egg prices that has spooked consumers.
Measures against shoplifting
The price hike has led to an increase in butter theft in some supermarkets, according to Russian media, and some retailers have started putting blocks of butter inside plastic containers to prevent theft.
The authorities, who have done everything possible to try to ensure that the war in Ukraine does not affect people's daily lives, are watching closely.
Dmitry Patrushev, deputy prime minister in charge of agriculture, said on October 23 the government will monitor butter prices. He met with major producers and sellers of milk and said that imports are being strengthened.
Milk prices have also risen as have wages, interest, fuel and transport – all of which factor into butter prices. The purchase of butter from Belarus is not enough, so Russia expects large exports from Turkey, even from Iran and India, Russian media reported.
Some food prices are rising, too
Reuters reporters who visited three supermarkets in Moscow found shelves full of different types of butter at different prices.
But some buyers are complaining.
“Specifically, butter has increased in price, other fruits and vegetables too. Potatoes and cabbage are more expensive,” said Elena, a pensioner in Moscow. However, he was able to find cheap cucumbers and buckwheat.
In another supermarket, Sergey Popov said he was worried.
“Every morning, we have to eat butter for breakfast. We buy milk, cheese, sausages, eggs and bread. And where did those 1,500 rubles ($21.34 Cdn) go? It is very expensive. It is not clear why the prices are increasing,” he said.
Putin has boosted Russia's economy, re-emphasizing the relationship between 'cannons' and 'butter' after appointing economist Andrei Belousov to head the Ministry of Defense earlier this year.
Defying Western expectations
The US economy of two billion dollars has so far exceeded expectations: soon after Putin sent troops to Ukraine in 2022, Western economists predicted its imminent collapse.
Instead, despite heavy Western sanctions imposed on the country, it grew faster than the United States and all major European countries.
Russia has been hit with some 16,000 international sanctions since its all-out invasion of Ukraine, but its economy has not yet recovered. CBC's Briar Stewart explains how it's staying afloat — with a lot of help from China.
Rates, however, are now rising – as are interest rates, which the central bank raised to 21 percent on October 25, the highest since 2003. The central bank predicts an increase in inflation from 8.0 to 8.5% this year.
As it battles Western-backed Ukraine, Russia is spending more on defense than at any time since the Cold War — and that's driving up prices even as the International Monetary Fund forecasts growth of 3.6 percent this year.
Jim O'Neill, the former Goldman Sachs chief economist who in 2001 coined the term “BRICs” – referring to the emerging economic powers of Brazil, Russia, India and China – has questioned how sustainable this trend is.
“It's all because of Russia's massive defense spending,” O'Neill told Reuters of the big picture. “So I think the medium-term outlook in the long-term outlook is quite bleak.”
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