In wartime Russia, soaring prices bite as election looms

[November 16, 2023]  
SREDNEURALSK, Russia (Reuters) - For Darya Stepanova, a mother of two who lives in a small town on the eastern side of the Ural mountains, soaring prices for everything from baby food to nappies have forced her family to cut back on most treats and eating out.

The Stepanov family is one of millions of Russian families having to cut back due to the significant changes forced on Russia's economy by the war in Ukraine and the myriad sanctions imposed by the West.

Stepanova, 34, her five year old son and newborn son, try to make ends meet on the 50,000 roubles ($550) a month her husband Sergei earns. When she goes through the snow to the shops, she inspects the prices to search for bargains.

"I can see how everything has become more expensive in the course of just these past five years," Stepanova told Reuters in her flat in Sredneuralsk, a town on the shores of Lake Iset about 25 km (15 miles) north of the Urals city of Yekaterinburg and 1400 km (870 miles) east of Moscow.

"Before you could buy food worth a thousand roubles for three or four days easily, but now when you go to the shop a thousand roubles is nothing - you can only buy food for everyday needs, like milk, yogurt, bread and that's it - your thousand has flown away."

Baby milk has quadrupled in price over the five years since her first child, she said, while the price of prams have tripled to 60,000 roubles. Prices for disposable nappies and baby food have at least doubled, she said.

The family's income has not risen by anything like that while the rouble has fallen against the U.S. dollar since February 2022, when President Vladimir Putin ordered troops into Ukraine, making imported goods more expensive in rouble terms.

"There is no money left for treats," Stepanova said. "Of course you can live without them but life is less fun."

While many families across the world are grappling with price rises, the peculiarities of Russia's wartime economy have spurred high inflation for millions of Russian voters ahead of the 2024 election.

The family did not want to discuss politics, Ukraine or who was to blame for the price rises so it is not immediately clear just what longer-term impact the tougher conditions will have on voting in Russia.

Putin is expected to run in next year's election, a move that would keep him in power until least 2030.

RUSSIAN ECONOMY

The West imposed what it called the toughest sanctions ever on Russia in an attempt to undermine its economy and force Putin to change course over Ukraine but he refused and has goaded the West for failing to stoke an economic crisis.

A general view shows a food market in Saint Petersburg, Russia, November 10, 2023. REUTERS/Anton Vaganov

Russia, the world's biggest exporter of natural resources, has continued to sell its oil to world markets and the government has hiked military spending to a post-Soviet record while weapons production has soared - as have salaries for contracted soldiers willing to fight.

The International Monetary Fund forecasts Russian growth of 2.2% this year - faster than either the United States or the Euro area - though the Fund has lowered its forecast for 2024 growth to 1.1%.

When Putin came to power in 1999, Russia's nominal gross domestic product was just $210 billion after a decade of chaos and contraction but by 2013 it had grown into a $2.3 trillion economy. Last year, nominal GDP was $2.2 trillion.

Headline inflation was 11.9% last year in Russia and this year the forecast is 7.0-7.5% - while at least 15.7 million people live below the poverty line of 14,375 roubles ($157) per month, according to official statistics.

Igor Lipits, a Russian economist, said official Russian data on levels of poverty were poor - as was the overall picture for the Russian economy - despite often rosy announcements aimed at pleasing the Kremlin leadership.

"The real situation is bad," Lipits said, adding that he saw at minimum stagnation and a serious deterioration in economic health after the March presidential election. "A large part of the Russian population have very low wages."

He said around 20 million people could be in or on the verge of poverty in Russia, that many were in debt amid Central Bank interest rates of 15% and that some economists thought the rouble could fall after the election.

At a food market in the former imperial capital of St Petersburg, Lyudmila said she and her friends had sought to cut down and search for discounts. She declined to give her second name.

"What option do we have? Of course we won't die and we won't cry - we will try to survive somehow."

($1 = 91.4000 roubles)

(Writing by Guy Faulconbridge; Editing by Alexandra Hudson)

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