We continue to see Russia become neo-Tsarist, even as it becomes neo-Soviet. Just as in Tsarist times, Russia is creating an elite cadre of super-rich who glide through the major cities in golden carriages, meanwhile a vast majority languishes in extreme poverty. The latest inflation news underlines this scenario, with food prices spiraling out of control (on pace for 12% annual inflation, and this isn’t even the rate for the small basket of basic foodstuffs which ordinary people, earning $3/hour on average, can afford — that rate is much higher and seldom reported — and this is the Kremlin’s own data, likely to be a gross understatement). Reuters reports:
The State Duma summoned Prime Minister Viktor Zubkov on Tuesday to report on rising consumer prices after a September spike squashed hopes of meeting the 2007 inflation target of 8 percent. “State Duma deputies ask you … to inform the Duma about the reasons for such growth in prices for basic food products and measures being taken by the government,” lawmakers said in a letter. Consumer prices rose 0.8 percent in September, bringing price growth in the first nine months of the year to 7.5 percent. Food prices jumped 1 percent in September due to rising costs of milk, dairy products and sunflower oil. While food prices are rising around the world due to a combination of demand and supply pressures that economists call “agflation,” the impact in Russia is particularly noticeable because food accounts for more than 40 percent of its consumer price index, compared with 15 percent in the United States and the euro zone. Prices have also risen since a law adopted earlier this year banned foreign traders from the outdoor markets, where most people buy their food staples.
Even newspapers usually deferential to the Kremlin have been raising the alarm over price rises. “Our wallets are emptying, and the government does not intend to do anything about it,” said Izvestia, owned by state-controlled Gazprom, in a front page story this week. The Duma asked the government to meet lawmakers to work out measures to stabilize conditions at the outdoor food markets, where the cost of hiring Russian traders has pushed up prices. At Monday’s ministerial meeting with Putin, Economic Development and Trade Minister Elvira Nabiullina proposed new foreign trade and local monopolies regulations. The foreign trade regulations include new export tariffs on grain and lower import tariffs on milk.