The Russian government is considering introducing strict state price controls on socially important products, prompted by soaring inflation amid poor harvests and huge war spending.
Points of attention
- The Russian government is contemplating implementing strict state price controls on essential products due to rising inflation and substantial war expenditures.
- Introduction of fixed prices for basic goods may result in production halts and shortages, echoing the fatal mistake made by the USSR in the past.
- Industry associations are opposing the idea, highlighting its unsustainable nature and its potential to disrupt production processes.
Will Russia repeat the fatal mistake of the USSR?
From March 1, 2026, basic food products in Russia can be sold under long-term contracts with fixed prices, which can be reviewed once a year.
It is noted that price regulation may primarily affect vegetables, in particular, potatoes, beets, carrots, cabbage, onions, tomatoes, cucumbers, as well as milk, eggs, sugar, apples, and sunflower oil.
Currently, industry associations are opposing such an initiative by the Ministry of Agriculture of the Russian Federation, because fixed prices cannot be maintained without losses, and in the future this will lead to a halt in production.
If this option is approved, the share of fixed-price contracts will increase every year — to 85% in 2027 and 90% in 2028.
For his part, the executive director of Rosprodsoyuz, Dmitry Vostrykov, believes that contractual self-regulation, which will take into account the cost and characteristics of each region, will be more realistic and less traumatic.
Falling oil prices and record war spending have severely dented Russia's national welfare fund, which could run out as early as 2026. At the same time, Vladimir Putin has talked about reducing war spending next year.
According to the Russian Ministry of Finance, the Russian budget deficit for the first half of the year amounted to 3.7 trillion rubles, which is six times higher than the figure for the same period in 2024.
The International Monetary Fund has revised its forecast for the Russian economy. According to the Fund, after two years of fighting sanctions and a boom in military spending, Russia has faced a sharp slowdown in economic growth.
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