Food prices surge in Russia after drought: data

25th August 2010, Comments 0 comments

Prices of basic foodstuffs like buckwheat and flour have soared in Russia over the past month as the effects of its worst ever drought hit supplies, statistics showed Wednesday.

Inflation in Russia was 0.2 percent for the week 17-23 August, considerably higher than the figure before the drought and the third week in a row that prices have risen by this degree, the state statistics office said.

Most alarmingly, the price of Russian food staple buckwheat -- enjoyed by generations for breakfast or as an accompaniment with meat -- rose a very sharp 8.6 percent in the space of the week.

Flour prices rose 3.3 percent in the week, while milk was up 1.3 percent. The price of bread, a crucial component of the Russian diet which is consumed with almost every meal, increased 0.9 percent.

The drought, caused by the hottest summer in Russia on record, destroyed one quarter of the country's crops and prompted the government to slap a highly controversial ban on grain exports to protect domestic supplies.

But consumers have already seen buckwheat and other goods disappearing from the shelves as demand outstrips supply, stoking inflation.

The government, nervous of the price rises causing social discontent, has already warned that it will clamp down on any merchants seeking to profit from the situation with artificial price hikes.

Before the drought, Russia had been the world's number three exporter of wheat and its ban on grain exports drove global wheat prices to two year highs.

The government said Tuesday that inflation this year would now be higher than the previous estimate of 6.0-7.0 percent due to the drought but would still be lower than the 2009 figure of 8.8 percent.

Inflation in Russia, which reached levels that caused panic among the population in the 1990s, has been on a steady decline in the last years, allowing the central bank to cut interest rates during the global economic crisis.

© 2010 AFP

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