Waves of harsh sanctions against Russia in response to its invasion of Ukraine have resulted in supply disruptions and a sharp currency depreciation.
Even food staples grown in Russia are increasing in price, indicating the hardships that consumers will face as a result of waves of sanctions imposed in response to the invasion of Ukraine, which have resulted in supply disruptions and a sharp currency depreciation.
In a single week, most of the hearty ingredients needed to make borscht, a popular comfort food in Russia and much of Eastern Europe, saw double-digit price increases, with onions up more than 18% and cabbage up nearly 16%.
Some residents in some areas had to pay more than 40% more for some of the basic ingredients needed to make a savory stew with beets, potatoes, and carrots.
The Federal Statistics Service reported Wednesday that consumer prices rose 1.16 percent in the seven days ending March 25, down from 1.93 percent a week earlier.
The devastating economic consequences of President Vladimir Putin’s war in Ukraine are becoming clear, following a slew of sanctions and the exodus of foreign companies. The sharp rises in what Citigroup Inc. once dubbed the “Borscht Collection” of staples disproportionately affect the poorest Russians, potentially leading to even higher inflation expectations.
According to a Bloomberg poll of analysts conducted earlier this month, inflation could reach 20% this year, the highest level in nearly two decades. For the first time since the collapse that followed the Soviet breakup three decades ago, Russia’s economy is set to contract for two years in a row.
After Russia’s attack on Ukraine in late February, a wave of panic buying swept the country, causing prices for durable goods such as cars and television sets to skyrocket. However, as consumers try to stock up for the future, the cost of basic goods is now under pressure.
In the week ending March 25, sugar prices increased by 6.5 percent on average. The cost of matches increased by 3.3 percent, while the cost of toilet paper increased by 2.9 percent.
Source: Bloomberg
