Food inflation in the country is gaining momentum. At the same time, the authorities say that there is no catastrophe, since wages and pensions are regularly indexed for Russians. However, officials are stubbornly silent about the situation with real disposable income, which has been on a downward path for eight years now. We decided to see how much the prices for food went up in comparison with people’s incomes. Moreover, they took a period of ten years for the cut-off – from 2011 to 2021, and not the last year or two, so that the picture does not come out distorted due to the coronavirus crisis and lockdowns.
For the purity of the experiment, we used only the official data of Rosstat (excluding alternative sources), and only the national averages. Since in different regions and even in different stores of the same region, prices can vary greatly.
So, in 2011 Russia has not yet fully recovered from the severe crisis of 2008-2009, but GDP growth has already reached the pre-crisis level. The price of oil rose, taxes began to be collected more actively, in addition, there was an unprecedented harvest of sugar beets, sunflowers and vegetables. Retail trade has sprung up and people are spending more money on goods.
But people left the economy mode not because they earned more, but due to previous savings and loans. The average salary then amounted to 23,369 rubles (today – 53,700), the average pension – 8,278 rubles (today – 17,500), and the average annual dollar exchange rate was 29.4 rubles (today – 71 rubles).
And now the most interesting thing – let’s compare food prices in 2011 and now according to Rosstat data. In general, they were significantly lower than the current ones. There are two exceptions: buckwheat groats, a kilogram of which in 2011 was sold at the price of 112.02 rubles (now – 99.27 rubles) due to the then crop failure (now – 99.27 rubles) and white cabbage (38.1 rubles then, now – 33.04).
Butter, kg : 247.7 rubles – 655.3 rubles (an increase of 164%)
Chicken eggs, 10 pcs .: 35.1 rubles – 80.6 rubles (an increase of 129.8%)
Rye flour bread, kg : 27.8 rubles – 58.2 rubles (an increase of 109.4%)
Fat cottage cheese, kg : 172.7 rubles – 359.6 rubles (an increase of 108.1%)
Wheat flour, kg : 21.3 rubles – 48 rubles (an increase of 101.8%)
Wheat flour bread, kg: 44.5 rubles – 87 rubles (an increase of 95.5%)
Bananas, kg : 46.1 rubles – 88 rubles (an increase of 91%)
Pasteurized milk, l: 31.8 rubles – 59.6 rubles (an increase of 87.4%)
Pasta, kg: 46.7 rubles – 87.2 rubles (an increase of 86.9%)
Boneless beef, kg : 2001 – 313.9 rubles. 2021 – 532.6 (an increase of 69.7%).
Tomatoes, kg : 87.3 rubles – 148.2 rubles (an increase of 69.6%)
Sunflower oil, l .: 78.1 rubles – 130.5 rubles (an increase of 67%)
Apples, kg : 71 rubles – 113.1 rubles (an increase of 59.3%)
Carrots, kg : 37.9 rubles -59.4 rubles (an increase of 56.7%)
Cucumbers, kg : 91.6 rubles – 134.3 rubles (an increase of 46.7%)
Potatoes, kg : 34.5 rubles – 47.2 rubles (an increase of 36.9%)
Granulated sugar, kg : 39.6 rubles – 50.5 rubles. (an increase of 27.5%)
Buckwheat groats, kg : 112 rubles – 99.2 rubles (a drop of 11.4%)
White cabbage, kg: 38.1 rubles – 33 rubles (a drop of 13.3%)
Objective and man-made factors
And all would be fine if the well-being of citizens did not lag hopelessly behind this impressive dynamics, did not run counter to it. According to Rosstat estimates, real disposable income per citizen in the first quarter of 2021 averaged 32,612 rubles. We will operate with this figure, as well as the indicator of ten years ago (20,780 rubles), since, unlike salaries and pensions, it concerns all citizens of the country without exception.
Let’s try to calculate the number of weight units of different food products that can be bought for these amounts. Take chicken eggs, for example. In the case of 2011, we divide 20,780 by 35 (price per ten), we get 593.7. In the case of 2021, we divide 32612 by 80.6, we get 404.6.
That is, ten years ago, the average disposable cash income made it possible to purchase 593 standard packages with a dozen eggs, and today – 404. But what is obtained with other products.
How much could you buy in 2011 and 2012 with average disposable income
Butter : 83.8 – 49.7 kg
Wheat flour : 973.7 – 679.4 kg
Rye flour bread and: 747.4 – 560.3 kg. Accordingly, a modern Russian will be able to prepare standard sandwiches with butter on his average income about one and a half times less than he could a decade ago.
Pasteurized milk : 653.4 – 547.1 liters
Fat cottage cheese: – 120.3 – 90.6 kg
Pasta – 444.9 and 373.9 kg
Boneless beef – 66.1 – 54.9 kg
Olive oil – 40.5 – 30.4 liters
Bananas – 451.7 – 370.5 kg.
This gap gives some idea of what happened to the purchasing power of citizens over the decade. It fell by an average of one and a half times, if we count on basic foodstuffs.
Oil and gas – not about us
Since 2011, real disposable income has grown by one and a half times (by 50%), and the same fruit and vegetable products have added an average of 70% in the retail price, said Elena Tyurina, a member of the agrarian committee of the Chamber of Commerce and Industry, in an interview with MK. Today, she said, the demand for fruits and vegetables is declining. Firstly, due to their rise in price (which has lost its seasonal nature), and secondly, households are forced to spend more and more money on utility bills and on the purchase of gasoline.
At the same time, ten years ago, fruit and vegetable products were 70% imported in winter, and we are even talking about borscht set (potatoes, cabbage, beets, carrots) and greenhouse vegetables, and not about bananas, kiwi, mangoes and other tropical products. Today, according to Tyurina, the share of imports has dropped to 40-45%, since since 2014 domestic investors have begun to invest more in the construction of greenhouses and vegetable stores.
But no import substitution, no greenhouses and no state subsidies to farmers can save the situation. Otherwise, the average retail prices would not have added tens of percent. It’s all about factors that the Russian authorities can do nothing against. Or do they not want to?
“Since 2011, the dollar rate has risen from 30 rubles to more than 70 rubles,” recalls Anna Bodrova, senior analyst at IAC Alpari. – A huge number of components for production and consumables, as well as raw materials and technologies are still bought for foreign currency. In addition, the wages fund has grown by about 30-35%, logistics, raw materials, packaging, advertising have risen in price … As for people’s real incomes, they in modern Russia are five to ten percent behind the dynamics of consumer prices. “
Even the current high prices for oil and gas, the main items of Russian export, cannot raise the purchasing power of the population. After all, whatever the energy prices, Russians get absolutely nothing from this, in fact continuing to live with oil costing $ 42.4 per barrel, says financial analyst Sergei Drozdov. Under the fiscal rule, all oil and gas revenues in excess of this government-set cut-off price are channeled to the National Welfare Fund.
It is high time to rename this financial “money box” of the government, the analyst believes: since the creation of the NWF in 2008, the welfare of citizens has only been degrading. The expert also recalls that the collapse of the ruble exchange rate in 2014-2015 did not lead to a significant increase in the price of food: then the rise in prices was restrained by large retail chains, which dictated their terms to suppliers. But today it no longer works. In addition, in those years, producers’ margins were higher, and they shrank as much as they could in income, without touching prices, so as not to scare away consumers. But now all their resources have been exhausted.
Drozdov also believes that the stable increase in the cost of gasoline, which, regardless of the situation on the oil market, has never dropped in price over the past decade, is also a powerful long-term driver of food prices growth. This, in turn, increased the share of transportation costs in the production of goods, sales of finished products, and harvesting. And in 2019, price tags in grocery stores reacted to another factor that arose then – value added tax (VAT) at a new rate of 20% instead of 18%.
The weak ruble is the root of all evil
“To understand why the purchasing power of the population has fallen, one must proceed from all the macroeconomic events that have taken place in Russia and the world over the past decade,” says Nikita Maslennikov, a leading expert at the Center for Political Technologies. In his opinion, the weak ruble remains the main pro-inflationary factor: settlements with foreign suppliers are carried out in dollars and euros, and when foreign exchange prices (including for food products) jump, this is immediately reflected in domestic prices.
“The pattern is reinforced concrete, nothing can be done about it,” Maslennikov says. “Plus, all the cards were confused by the pandemic: if it weren’t for it, the government could still fight inflation only using standard monetary methods.” But one cannot do now by raising the key rate of the Central Bank, you need to fully include all the economic levers that history knows.
As for the comparative picture of food prices in 2011 and the current year, it is rather arbitrary. According to the expert, one thing is clear: almost every year in this decade, food prices outstripped the level of general inflation. But the composition of the consumer basket has undergone dramatic changes. The assortment has expanded, the availability of goods has grown, the names of meat, poultry, milk, vegetables and fruits have significantly increased. Largely for the same reason, it is difficult to compare the then and today’s purchasing power of Russians.
According to Maslennikov, the situation with real disposable income is much more indicative – a universal indicator of the quality of life, the return on economic growth. And since 2013, these revenues, according to the calculations of the same Rosstat, have fallen by more than 10%, our interlocutor recalls.
And, by and large, it is not so important how much (and for what groups of goods) food prices have grown over the past decade. Much more significant is the gap between their trajectory and income dynamics. The state left people alone with this problem, which in 2021, against the background of galloping price increases, escalated to the extreme. No matter what officials say about this price outrage, no matter how convincing and economically sound their justifications sound, Russians will not have more money. Millions of citizens received a salary of 30 thousand rubles in 2011, and they receive it today.
The average Russian family spends 44% of their income on food, and a family with children even more. And you also need to pay for utilities, buy the most necessary medicines and tickets for public transport.
So it turns out with such a structure of average Russian incomes and expenses that an ordinary sandwich with butter is becoming a much more expensive pleasure for citizens than 10 years ago. That simple statistical experiment “MK” once again confirmed.
