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15 Feb ’12
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That's kind of an understatement
The food prices in Russia have risen significantly, reports the Nezavisimaya Gazeta daily, quoting data of the Russian Statistics Service.
Inflation is also rising – the data as of the beginning of December shows that the annual inflation has reached 9.4%.
In one year the average price of pork and sugar rose by 25%, while prices of buckwheat – one of Russians' staple foods – soared by 65%. Fish and seafood prices rose by more than 15%.
The daily calculated that between October and November the average price of the market basket of basic foodstuffs rose by 3% and since the beginning of the year – by 9.8%, based on the official statistical data.
Novaya Gazeta, however, notes that in reality the prices in some regions of Russia soared even higher, quoting data from the Nizhegorod region. There prices of potatoes rose by 40%, of cabbage – by 32%, of fish – by 42% and of buckwheat – by 74%, compared to November 2013.
According to the publication, the producers of meat and meat products expect a further price hike of around 20-30%, while the traders of coffee and tea expect the prices of tea to rise by 20% in 2015.
- See more at: http://www.novinite......yWGT1.dpuf
15 Feb ’12
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will be interesting to see decembers numbers
19 Feb ’12
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Enlighten me. why are their food costs going up so steeply?
15 Feb ’12
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my understanding is their economy is solely based on energy exports, with the fall of the price of oil, plus the sanctions over the ukraine issue, the economy is taking a huge hit
15 Feb ’12
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plus their interest rates are climbing to battle the inflation, which is stifling the economy
Russia raises interest rates to 10.5%
Russia's central bank has raised its key interest rate by one percentage point to 10.5% as it steps up the fight to tackle inflation.
It comes just six weeks after it raised the rate to 9.5% from 8%.
The bank's official website added that it would continue raising the rate "in case of further aggravation of inflation risks".
In its monthly economic update the Bank of Russia also said that, as of 8 December, annual inflation was 9.4%.
A weak rouble and a ban on western food imports has kept inflation high.
'Brink'
"The hope is that [interest rate rises] will cut consumption and stop prices rising so fast," said the BBC's Moscow correspondent Steven Rosenberg."
But there's a downside to that; raising interest rates slows economic growth - and that's not good, with Russia on the brink of recession.
"As for the rouble, it has continued to slide and has fallen to a new low against the dollar."
The rouble hit new lows after the rates decision, and was trading at 55.45 against the dollar and 68.98 against the euro not long after the bank's announcement.
The rate hike comes a day after the bank admitted it had intervened to support the rouble in foreign currency markets last week, spending a total of $4.53bn (£2.9bn).
It has spent more than $70bn supporting the rouble since the start of the year.
The Bank of Russia also said on Thursday that GDP growth would be weak during 2015-16, as consumer activity weakened.
Analysis: Andrew Walker, BBC economics correspondent
There were no easy options for the Russian central bank. Rising inflation and weakening economic activity call for opposite moves in interest rates.
The bank chose to focus on the inflation problem and used the standard response from the central bankers' toolkit.
The sharpness of the dilemma has a lot to do with sanctions. The west's economic response to the conflict in Ukraine has aggravated both inflation and the economic weakness.
The impact on inflation is through the value of the Russian currency. It has been undermined by nervous Russians and others getting their money out due to fear of the impact of sanctions. The precipitous fall in the Rouble's value in turn pushes up the price of imported goods.
If the west wanted evidence that sanctions are making a difference, it's plain to see in the conflicting pressures facing Russia's central bank.
Indian deal
The World Bank has previously warned that the Russian economy will shrink by at least 0.7% in 2015 if oil prices do not recover.
The drop in the price of oil has also hurt the Russian economy.
The World Bank's estimate is based on a scenario of crude prices averaging at $78 in 2015.
But if oil prices fell to $70 on average, Russia's output would shrink by 1.5%, it said.
In late morning trade, North Sea Brent crude rose 63 cents to $64.87, up from Wednesday's low of $63.56 - the weakest in five years. Meanwhile, US crude, which also hit a five-year low on Wednesday, rose 48 cents to $61.42.
Also on Thursday, Russia's top crude oil producer Rosneft said it had reached a preliminary agreement to supply India's Essar Group with 10 million tonnes of oil over a 10-year period.
4 Mar ’12
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same thing will happen here soon. the cali drought will take it's toll.
funny, remember when the gas/oil prices rose that food prices were also raised. the reasoning behind it was that it cost extra to truck the food to your location. I dont see food prices coming down now that oil has decreased. nor do i expect they ever will.....
15 Feb ’12
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we have been seeing some price drops wholesale, retail usually takes a little longer, but it never goes down as fast as it goes up, I'm waiting to see if they remove all the fuel surcharges that ha been added to the deliveries
15 Feb ’12
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this doesn't help
The ruble collapsed by 10 percent against the U.S. dollar Monday earning the Russian currency the dubious laurels of the world’s worst-performing currency this year.
The Russian currency has now fallen 49.3 percent against the greenback since January, according to data from the Moscow Exchange. The drop takes it below the Ukrainian hryvna, which has weakened 47.9 percent in 2014.
Monday’s plunge was the largest single-day fall for the ruble since the financial crisis of 1998 when Russia was forced to default on its debt after exhausting its reserves in a fruitless bid to prop up the currency.
In evening trading Monday the ruble was worth 64.4 against the dollar and 78.8 versus the euro. The currency earlier dropped past 100 rubles to the British pound.
Russian stocks followed the ruble downward with analysts at Bank of America Merrill Lynch labeling the 10 percent decline for some shares “local capitulation.”
The dollar-denominated RTS Index, particularly vulnerable to ruble weakness, fell 10.12 percent Monday to 718.32 points, its largest drop since March when Russia moved to annex Ukraine’s southern Crimean Peninsula.
The ruble’s depreciation has gathered pace in recent days with the currency shedding 15 percent versus the dollar in the last three days of trading alone.
The ruble has been under heightened pressure from falling oil prices — with Brent crude now trading at almost $60 a barrel down from a June high of $115 — but appeared Monday to decouple from its traditional link to the oil price. Oil initially strengthened Monday, before reversing gains after stock markets closed in Moscow.
“The ruble today became detached from oil fundamentals,” Tom Levinson, currency strategist at Sberbank CIB in Moscow, said in written comments.
“The problem is that there is no obvious 'end game' for investors to grab hold of when it comes to a possible turnaround. Markets are pushing at an open door,” he said.
The Ghanian cedi and the Argentinian peso occupy the places above the hryvna and the ruble at the bottom of the table of this year's worst-performing currencies. The hryvna has been battered by a full-blown recession in Ukraine exacerbated by a war in the east of the country and the introduction of capital controls.
Monday's moves by the ruble were “staggering,” said Timothy Ash, an emerging markets analyst at Standard Bank, in a note to investors.
Currency traders said that the Central Bank intervened on the market to support the ruble Monday afternoon, according to the Reuters news agency. In line with the regulator's approach since letting the ruble free-float on Nov.10 however, the interventions were relatively small — apparently designed to slow the currency's fall rather defend a certain level.
"The policy response from the Russian authorities has been close to non-existent," according to analyst Ash. “This is a really high-risk strategy from the Central Bank.”
Experts earlier warned that the Central Bank could stage a large intervention on the market to punish traders betting on the ruble's continued decline, but such expectations appear to be fading.
There is an increasing conviction that “ruble bears will not be subject to any sudden bounce back,” said strategist Levinson.
While Russia has spent over $70 billion defending the ruble this year, it still has $420 of its foreign currency reserves left, according to Central Bank data.
Additional downward pressure on the ruble was generated by fears of an increase in tensions between Moscow and the West after the passage through the U.S. House of Congress at the weekend of a new bill that could harden sanctions against Russia over the Ukraine crisis if signed into law by President Barack Obama.
The Ukraine Freedom Support Act would “be negative for market sentiment,” analysts at Sberbank CIB said in a note Monday.
The speed and extent of the ruble's disintegration in recent days has also raised fears that the Russian government could resort to more extreme measures, including restrictions on the free flow of capital, in order to restore stability to the market.
“There is a growing sense that the currency crisis is spiraling out of control,” London-based macroeconomic research company Capital Economics said in an emailed report Monday.
“Hard-liners inside the Kremlin are most likely to be making the case for capital controls.”
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