'Food prices will continue to grow': why eggs, milk and pork have risen in price

The ruble volatility, rise in prices for transportation, mixed fodder and petroleum products are affecting the price increase. VAT will be added in the foreseeable future

'Food prices will continue to grow': why eggs, milk and pork have risen in price Photo: Anton Zhuravlev

The results of November for the food basket in Tatarstan are disappointing. According to the analytical department of Realnoe Vremya, a dozen eggs of the first category has already risen by 2,81%, butter and fat-free cottage cheese have risen in price by 4,79% and 7,61%, respectively. The expert forecast of the edition on the rise in price for pork, which added in price of 13,06% in November, has come true. Read the details in the material of Realnoe Vremya.

Chicken continues to rise in price

Unpleasant news for Tatarstan citizens — the most necessary products have again increased in price. For example, eggs in November alone rose by 2,81%, and since the beginning of autumn — by as much as 27,22%! Now the average cost of a dozen of eggs— 54,92 rubles, while on 1 September it did not exceed 43,17 rubles. The price dynamics for other food products from the food basket is also disappointing.

Since the beginning of November, butter (72,5%) has risen from 446,31 rubles per kg to 467,70 rubles — the increase amounted to 4,79%. Fat-free cottage cheese added 7,61%: at the beginning of the month, a kilogramme cost 224,32 rubles, at the end — already 237,72. The most noticeable rise in price are for chicken and pork – 5,63% and 13,06%, the latter since the beginning of autumn has increased in price by 20,78%. Even on 1 September, a kilogramme of pork cost 292,72 rubles, by the end of November the prices reached 353,55 rubles.

The cost of flour has slightly increased — from 40,18 to 40,81 rubles per kg, the increase is 1,65%. Buckwheat has risen most significantly, in early November it cost 114,16, and at the end of the month — 139,22 rubles per kg, the increase amounted to 21,89%. Experts disagree why these products have risen in price.

''We link the increase in the cost of eggs with the rise in price of mixed fodder, which on average rose in price by 11%. The same can be said about the cost of chicken. Many producers have long said that the production of poultry meat is currently at the level of marginality, respectively, the increase was played against the background of information on the reduction of poultry meat production in the country,'' representative of the Gorbatov Federal Research Centre for Food Systems Dmitry Gordeev commented on the situation to Realnoe Vremya.

Eggs in November alone rose by 2,81%, and since the beginning of autumn — by as much as 27,22%. Photo: Maksim Platonov

Cargo transportation has risen in price

However, the data on changes in prices for chicken and pork in the Federal Research Centre are somewhat different. ''According to our data, the increase in cost is not so significant — chicken on average rose by 0,7% in a month, pork — by 0,5%,'' experts say.

Changes in other positions of the food basket are related to the overall state of the economy.

''The increase in the cost of cottage cheese and butter is most likely reasoned by the general well-being of producers in the current economic situation. The rise in petroleum products prices, the volatility of the ruble and the rise in the cost of transportation play an important role here. Most likely, in the near future, food prices will continue to rise. The increase in VAT will also affect the increase in the cost of the consumer basket by an average of 3%. The Central Bank and the ministry of economic development have already reported that against the backdrop of rising inflation expectations in 2018, there will be a surge of inflation with the indicator exceeding 4%,'' Dmitry Gordeev predicts.

The immediate prospect of changes in food prices is not entirely encouraging. Despite the fact that the preferential VAT rate of 10% for socially important food products remains, the prices for them are going to grow in the near future. For the most part, the change in price will be due to indirect factors, for example, an increase in VAT on goods and services that accompany the production of products, according to expert of the Department of Expert and Analytical Work at the Analytical Centre under the Government of the Russian Federation Anastasia Sysoeva.

The rise in energy resources prices

Kamiyar Baytemirov, the chairman of the association of farmers and peasant farmsteads of Tatarstan, among the reasons for the November increase for some products calls the rise in price for electricity.

''As for animal husbandry, I can say that the change in prices for electricity, gas is affecting the cost of production, and this is taking place in the conditions when it is necessary to increase the production. Of course, manufacturers are not yet making ends meet, but the situation is close to it. The government does not fully influence the promotion of agricultural products. The rise in petroleum products prices is also having an impact. In general, the increase of cost to consumers is due to inflationary developments,'' Baytemirov said.

At the beginning of next year, the issue of pricing is to be decided with farmers, Baytemirov encouraged. ''Prices, of course, will not stand still, but will not rise sharply as well. At least, if there are no decisive external or internal factors,'' the expert predicts, without naming specific conditions that may affect.

He was also surprised by the fact that, with the decline in oil prices, petroleum product prices have remained at the same level, which also leaves unanswered questions.

The near-term prospect of changes in food prices is not entirely encouraging. Photo: Maksim Platonov

The analytical department of Alpari also mentions the influence of higher prices of mixed fodder on the cost of chicken and pork.

''The rise in price is caused by different reasons — chicken and pork rise in price mainly due to the increase in mixed fodder prices, pork – also due to the restriction of competition due to the outbreak of African swine plague and the ban on the import of pork from a number of states. Butter and cottage cheese are becoming more expensive due to rising milk prices, and the dairy market competition is very limited, there are only producers from Russia and Belarus. At the beginning of next year, food inflation in January, in my opinion, will not be below 4% year-on-year. The VAT increase will not affect directly on the growth of food prices, as for this category of goods VAT benefits remain,'' says deputy director of the analytical department at Alpari Natalia Milchakova.

At the same time, she notes that the inflation process in Russia is just beginning to gain momentum, as evidenced by several reasons, for example, a sensitive increase in bread prices. ''This is due to the rise in price of grain and, accordingly, flour, as well as the growth of electricity tariffs and rising prices for gasoline and other petroleum products,'' Milchakova cited an example.

By Yulia Kosolapkina
Tatarstan