by John Helmer, Moscow
@bears_with
For their daily bread, Russians pay much less than the citizens of the US, the European Union, and other bread-eating states in the warfighting alliance.
At current prices, the Russian loaf of white bread is cheaper by almost seven times than the American; six times less than the Norwegian; four times less than the Italian and German; three times less than the French.
In the war between armies marching on their stomachs, the Russian Army has already won hands down; that’s the farmers’, millers’, and bakers’ hands.
On the home front, however, it is not this international comparison which counts for Russian consumers. They are suffering from the comparison they are obliged to make between the price they pay for bread today and the price last year, or before the Special Military Operation in February 2022. Before the war, between 2019 and 2021, the average rate of inflation for bread was between 5% and 7% per annum. In 2024, the bread price rose, according to the state statistics agency Rosstat, by 13.2%. In fact, according to published studies in Moscow, bread inflation was double that rate at about 27% for the year.
The sensitivity of voters to this inflation in food prices is so great, President Vladimir Putin and Agriculture Ministry officials are trying to talk down the bread price and ask consumers to eat promises. According to Putin on February 7, “annual inflation stands at 9.5 percent, though as of February 3, this had reached 9.9 percent year-on-year. This presents a challenge, necessitating comprehensive measures to ensure balanced economic expansion.”
In a meeting with Prime Minister Mikhail Mishustin, the President said inflation is a goods supply problem which can be solved by targeted state intervention, including subsidies to producers, restrictions on exports of Russian foodstuffs, and jawboning oligarchs and other business owners to hold their prices down temporarily. “One paramount priority remains the development of a supply-side economy,” Putin said. “During the coronavirus pandemic, the Government executed highly effective sector-specific interventions. As previously discussed, including during meetings with the business community – whose representatives have advocated for this approach – we agreed with the Government to reinstate such sectoral coordination. We must assess the prospects of individual industries, identify priorities, and provide targeted support where required.”
Deputy Agriculture Minister Maxim Titov explained last week that state intervention in the food sector will be limited to asking the supermarket retailers to limit their bread-price markups to the government’s announced rate of inflation. “In principle,” Titov said, “as we see the dynamics of the price of bread, the price increase for the grain group that exists today has already been recouped.”
Titov also issued a radical warning disguised by a negative. “The cost of bread production is constantly growing,” he said, “but grain is not the main component in the cost of bread production.” The deputy minister means that after two years of bumper wheat harvests for the farmers and record tonnage of flour from the millers, the real reason for bread price inflation isn’t supply side at all. Instead, as Moscow think-tank research confirms, it is profit-making by the bread-sellers. Their profit margin has been reported as several times the average profit margin of the producers.
This is profit rigging and price gouging, as Russians understand it. Deputy Minister Titov is pointing the finger at Magnit (Dixy), Pyaterochka (X5), Mercury (Red & White, Bristol), and Lenta (Billa, Monetka), and to the oligarch groups of Alexander Vinokurov, Mikhail Fridman and Igor Kesaev who control them. Lenta, however, is part-controlled by the US private equity firm TPG Capital, based in Texas. Together, these four retailers have been steadily increasing their control over the entire Russian food retail marketplace; at present, they have a market share of more than 30%.
Reluctant as ministry officials and Russian agro-industry experts are to admit it, the reason for the acceleration in the price of bread is wartime profiteering. As a military source warns, “the picture is getting clearer; the outlook is getting dimmer.”
In global production of wheat, Russia is currently third after China and India, with more than double the production of the US, Australia, France and Canada, which also trail behind Russia on the wheat export markets. As an exporter of flour, Russia ranks only 10th on the world trade charts, but larger-volume flour exporters like Turkey and Egypt get much of the wheat they turn into flour from Russia.
As the following chart shows, large wheat and flour producers like the US, Canada and Australia have much higher priced bread than Russia.
CURRENT PRICE OF A 500g LOAF OF FRESH WHITE BREAD
Source: https://www.numbeo.com/