Mikhail Mishustin explained the rise in prices by the greed of retail chains and manufacturers

EXPORT income should not be at the expense of buyers

One of the reasons for the rise in prices in RUSSIA is the greed of individual producers and retail chains, Prime Minister Mikhail Mishustin said during a speech with a government report in the State Duma. He stressed that the state is not opposed to producers receiving income from exports, but this should not be done to the detriment of buyers living and earning in Russia.

Mishustin recalled that the government "has enough tools to curb the appetites of those who profit from the rush demand in all areas." According to the Prime Minister, no one is completely satisfied with the result of price containment. “But if it weren’t for the measures taken, it would be necessary to discuss not their effectiveness, but an explosive, uncontrolled rise in prices,” the HEAD of government noted (quote from the transcript on the Cabinet’s website).

Dmitry Peskov, a spokesman for President Vladimir Putin, commenting on Mishustin's words about the responsibility of producers and retail chains for rising food prices, said that the measures taken to adjust prices should be of a market nature, TASS writes. Peskov also added that Mishustin "set out everything in sufficient detail" on this issue and here "any point of view from the Kremlin is not required."

In addition, during the speech, Mishustin noted that the increase in prices for goods by Russian exporters, following the world ones, pushed up the acceleration of inflation in Russia. He said that low interest rates and fiat money in the market drove inflation around the world, pushing up the cost of food. Not wanting to lose profit, many entrepreneurs raised domestic prices following the world ones. “Imported inflation has become the flip side of our success in building up the export potential of the agro-industrial complex. This, in turn, led to an increase in prices for socially important goods within the country,” Mishustin explained.

He noted that the government has taken a flexible approach to contain the prices of socially important food - the choice was made in favor of economic instruments. For a number of food products, long-term compensatory mechanisms have been introduced that reduce the dependence of domestic prices on world prices, and now the export duty collected in the form of subsidies is returned to producers. In addition, the government allocated an additional 15 billion rubles to support producers of FLOUR, bread, SUGAR and other agribusiness, Mishustin recalled.

Daria Snitko, head of the Gazprombank Center for Economic Forecasting, said that, according to the center, food prices have been rising since March 2020, and not so much due to reduced production or increased consumption, but because of the desire of large consumers to stock up. “ CHINA ’s active purchasing policy regarding feed crops for pig breeding, mainly soybeans and corn, actively influences prices, but as China’s harvest forecasts become clearer and the country’s pig production recovers, overheating will leave the market,” the expert noted. “In the next couple of weeks, expectations for the grain harvest in the Northern Hemisphere will be significantly refined, which may also have a corrective effect on the market.”

According to Snitko, for the next two or three years, prices will only fix at high levels in the oilseed sector, as global production in the palm oil segment is expected to decline somewhat due to the reduction in plantations. In the grain segment, as well as in the MEAT sector, prices will be adjusted as supplies are balanced and quarantine restrictions are lifted in countries, Snitko predicts.

Food prices in April - Rosstat

On April 21, in his address to the Federal Assembly, President Vladimir Putin  called on the government not to rely on targeted measures, but to create long-term conditions that, using market mechanisms, would guarantee price predictability and high-quality saturation of the domestic market. He also drew attention to the unconditional impact of the CORONAVIRUS pandemic on the well-being of Russians and the rise in prices, which "eat up the incomes of citizens." Putin also proposed to stimulate investment activity by reducing the risks of doing business. But the main thing, in his opinion, is to ensure the growth of real incomes of the population and achieve tangible changes in the fight against poverty.