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"Borscht Inflation" Has Hit Russia

"Borscht Inflation" Has Hit Russia
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Prices for basic vegetables have jumped 20–40% over the past year.

While Rosstat reports that inflation has stabilized at around 6% per year, Russian consumers continue to face double-digit price increases for basic food items, according to The Moscow Times.

The cost of vegetables used in borscht—which form the basis of the daily diet for tens of millions of Russians—has risen by 20–40% over the past year, according to calculations by NTech analysts (their findings were published by Kommersant).

Cabbage has emerged as the frontrunner in the inflation race: at the end of August, it cost 30 rubles per kilogram—38% more than a year earlier. Beets rose in price by 32% year-over-year at retail (to 35.4 rubles per kg), potatoes by 30% (to 41.5 rubles per kg), onions—by 32% (to 45.2 rubles per kg), and carrots—by 20% (to 43.5 rubles per kg).

Prices for vegetables used in “borscht” reflect changes in production costs amid cumulative cost increases, notes Stanislav Bogdanov, chairman of the Association of Retail Trade Companies: Fuel and lubricants have risen sharply in price; seeds, fertilizers, and crop storage have become more expensive; and transportation costs have increased, especially to major metropolitan areas, where vegetables must be shipped from southern regions.

Data from Rosstat confirm that, despite the seasonal summer decline in prices, on an annual basis, potatoes and cabbage have risen in price by 35.3%, onions by 27.2%, beets by 20.4%, and carrots by 17.7%. According to official statistics, tomato prices also rose sharply: at the end of August, they cost 165.9 rubles per kilogram—24.2% more than a year ago.

Price increases for “borscht ingredients” are outpacing official inflation by a factor of 3 to 6. The fuel crisis is also driving up prices on supermarket shelves: the cumulative increase in gasoline prices since the beginning of the year already exceeds 20%, and “this factor is gradually beginning to have a stronger impact on the cost of transportation and other goods,” notes Freedom Global analyst Vladimir Chernov.

Food inflation is forcing Russian consumers into a mode of necessity-driven frugality. Last year, they spent 39% of their total expenses on food—a record share over the past 16 years. And this year, they have even begun cutting back on food expenses. According to “EvoTor,” in the first half of the year, the number of purchases at neighborhood stores fell by 10%, and at specialty grocery stores—by 5%. Major retail chains—Pyaterochka, Perekrestok, and Lenta—have faced a drop in foot traffic, but the decline has been most noticeable at premium supermarkets such as Vkusvilla and Azbuka Vkusa.

Most food manufacturers are seeing a decline in sales through the retail channel, notes Dmitry Vostrikov , executive director of the Rusprodsoyuz association . Shoppers are making fewer impulse purchases, avoiding trips to neighborhood stores, and increasingly turning to hard-discounters, Vostrikov notes.

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