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Russian food price hikes four times greater than in EU

October 25, 2013, 10:54 UTC+3

Food prices grew 2.7% in January - September 2013, which is 3.9 times above the price growth in the EU

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Food prices grew 2.7% in January - September 2013, which is 3.9 times above the price growth in the EU (0.7 percent), says a report by the Federal State Statistics Service (Rosstat) quoted by the Novyie Izvestia daily. The traditional seasonal price decline in September also noticeably underperformed that in Europe — 0.2% in Russia against 0.4% in Europe.

Since the year-start food inflation was the fastest in dairy products, cheese and eggs - 6.5% against the EU average of 1%, bakery and cereals — 5.5%, oils and fats, as well as sugar, marmalade, honey, chocolate and candies — 5.2% and 5.1% respectively (2.3% and 0.3% in the EU). Meanwhile, in Europe fruit prices showed the strongest decline in September, with Spain (12.9%), Hungary (10.2%), France (7.3%), Portugal, Poland and Latvia (6-6.8%) posting the deepest fall.

In month-on-month comparison prices of dairy products, cheese and eggs jumped 3.3% (the average of just 0.2% in the EU), while oils and fats added 1.5% against the average 0.3% rise in the EU. Lately, fish and seafood prices increased 1.1% in September against 0.2% in the EU.

“Faster food price growth in Russia as compared to that Europe is in many ways due to harvest problems, one of the reasons being unfavorable weather conditions this year. In particular, floods in the Far East. Besides, food has energy resources considerably priced in. Finally, we have joined the WTO, so agricultural subsidies started to decrease, which intensified price growth in agricultural products,” an expert of the Center for Current Politics, Dmitry Abzalov, told the paper.

“There are two major factors for food price growth. First, Russia’s reliance on food export and, accordingly, food prices’ dependence on the ruble's rate against the dollar and the euro. Then there is the high inflation rate. Soaring tariffs for energy resources, electricity and diesel fuel have also had a major effect on production costs in agriculture. Lastly, this year's harvest is not as good as it was originally expected, which means supply put no pressure on prices,” an investment company’s analyst Anatoly Voronin told Novyie Izvestia.

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