Fall in oil and ruble, prices in Russia spark "political battle

Jan. 13, 2015

Fall in oil and ruble, prices in Russia spark "political battle"

In 2015 inflation will hit double digits for the first time in seven years. Sanctions, fall in oil prices and the ruble devaluation affect consumer prices, which become the main topic among Russians, overcoming the Ukrainian crisis. The Kremlin orders the judiciary to monitor prices and payments of salaries, while the Communists want to prices of some products fixed, against all the rules of the free market.

اقتباس :: Moscow (AsiaNews): The illusion of oil is over, but the Russian government have realized it too late. This is according to newspaper Nezavisimaya Gazeta commenting on what has become the most discussed topic in Russia, surpassing even the Ukrainian crisis: the relentless fall in oil prices. On January 13 Brent fell under 46 dollars, the lowest point in the last six years. The fall in black gold, along with Western sanctions against Moscow and fears of a debt downgrade by Standard & Poor's in the coming days are even dragging down the Russian currency, which today exchanged at 77 per euro and 65 per dollar.

The drop in the price of oil per barrel has led experts to revise inflation forecasts upwards, while prices have sparked what the media have called a "political battle" in Russia. Oil and gas account for two thirds of exports and count for half of the federal budget for the Federation (which has no plan B for a scenario of a barrel below 60 dollars); fluctuations in crude oil prices are a key factor of economic development, the trend of the currency and inflation, explained Morgan Stanley in a recent report on the country. According to the online newspaper Gazeta.ru, which has sought the opinion of several analysts, consumer prices will rise by 13-15%, twice as much as announced by the government. This level of inflation in Europe is only matched by Ukraine (21%) and Belarus (16.2%).

Inflation will return to double digits for the first time since the 2008 crisis, even according to the data of the Federal statistics agency Rosstat, according to which prices rose by 8.1% in 2014, while food (affected by the Russian embargo on imports from Western countries) is up by 15.4%. After the introduction this summer of the ban on some categories of foods imported from nations that had launched punitive measures against Russia for the Ukrainian crisis and before the dramatic collapse of the ruble, which made the imported products even more expensive, Moscow had promised to monitor the situation to prevent the market from going out of control. Upon returning from vacation in the New Year, however, the Russians have discovered increases everywhere and a diverse geographical origin of those products available: for example garlic, widely used in national cuisine, now only comes from China.

Thus, the prices of consumer goods - again Nezavisimaya Gazeta reports - has already sparked a "political battle" to gather support, pushing aside the nationalist and patriotic rhetoric which has so far accompanied public debate since the outbreak of the Ukrainian conflict. The Kremlin has asked the judiciary to monitor the prices of gasoline, food and medicines to prevent speculation and to intervene if the payment of wages or benefits is deferred. Communist MPs, for their part, are preparing a bill that establishes consumer prices of fifteen products including bread, dairy products, cereals and pasta and potatoes, providing penalties such as the withdrawal of licenses from traders who do not pass the Federal Antimonopoly controls. For Tatiana Komissarova, of the Higher School of Economics in Moscow, this is a populist proposal that goes against the market economy.