The head of the Bank of Russia offers alternative methods of price regulation

Administrative containment of prices for SUGAR and sunflower oil has exhausted itself in April, said the HEAD of the Bank of RUSSIA Elvira Nabiullina.

In December last year, the government announced a set of measures in connection with the rise in food prices in Russia, among them the conclusion of agreements to stabilize prices for Russian-made sugar and sunflower oil. The agreements fix the marginal prices: for sugar - 36 rubles per kilogram in wholesale and 46 rubles in retail, for sunflower oil - 95 rubles and 110 rubles, respectively. Initially, the agreements were concluded before April 1 of this year, but were subsequently extended: for sugar they will be valid until June 1, for butter - until October 1, 2021.

"Unfortunately, we see that in April the rise in prices for sugar resumed, for butter accelerated. We believe that these measures, although they had an impact, were very limited and short-term. And we believe that in the long term, of course, this distorts market signals to producers may lead to underinvestment in some areas," Nabiullina said on Friday.

The head of the Bank of Russia believes that other mechanisms should be introduced to replace administrative measures to contain prices: the first, optimal option is targeted support for those in need, the second is dampers for a limited list of goods.

The damping mechanism is designed to smooth out the impact of world prices, including their strong changes, on the domestic market, stabilizing retail prices in Russia.

The Ministry of Agriculture expects moderate dynamics of food prices within the limits of general inflation

At the same time, she stressed that even in the case of market regulation mechanisms, one must act carefully and introduce them in a limited list of cases, otherwise there is a risk of distorting price dynamics. In addition, this may influence producers' plans and their willingness to invest.