YEKATERINBURG, Russia: Many Russians are tightening their belts this holiday season.
Stubborn inflation has pushed up the prices of staples such as butter, potatoes and chicken in recent months, hitting Russia’s poorest and prompting some to cut back on spending this holiday season.
Reuters spoke to Russians in Moscow, St. Petersburg, Yekaterinburg in the Urals and Omsk in Siberia to understand how people manage their finances.
“Prices have increased noticeably,” said Natalia Moreva, 58, mentioning that flour, bread, chocolate, fruit, vegetables and meat have all increased in price.
“The income is sufficient, but if you went to the store you used to be able to buy more,” says Moreva, who works for the Omsk regional government.
“The holiday turns out to be a modest holiday.”
Russians traditionally increase their spending in the last few weeks of each year, preparing for New Year’s celebrations and national holidays in the first weeks of January. This year they had to spend a lot more.
“Much more expensive, it’s hard on the wallet. In the past New Year’s Days, expenses more or less met the budget. Now the costs are much higher, maybe three or four times as high as before,” says Dinara, a student from Yekaterinburg . , the fourth largest city in Russia.
RISING COSTS
Real wages have risen across Russia, largely due to rising salaries in the defense and technology sectors. But for many, wages have not kept pace with inflation, which stands at more than 9 percent, despite the central bank keeping interest rates at 21 percent, the highest in more than two decades.
Vyacheslav, 73, a retiree in Omsk, said he noticed prices rising overnight.
“It is of course not very pleasant or convenient for people at the moment. We understand that the country is currently in a difficult situation, but I would still like to see food prices not rise so quickly.
The price of his favorite cheese has risen 15 to 20 percent since September, he said, to about 850 rubles.
Inflation could end the year as high as 9.8 percent, Andrei Gangan, director of the central bank’s monetary policy department, told Interfax on Tuesday, and will peak in April 2025 before starting to decline.
The central bank defied expectations for a rate hike last week and opted to maintain current borrowing costs, but rising borrowing costs are cooling demand in Russia’s real estate market, with mortgage rates of up to 30 percent deterring potential buyers and a rental market booming.
“Community services are becoming more expensive, as are taxes, and that is very noticeable,” says Moscow student Veronica Arefieva. “If you go to the store, a loaf of bread that once cost 20 rubles now costs 50 rubles.”
Another Moscow student, Sergei Shoreshorin, said the price of chocolates was “scary”.
Even the cost of pine trees was high, St. Petersburg buyers agreed.
“There are people who need a tree and don’t even ask the price, they just buy one,” said Ramiz, who sold trees in the city. “And there are people who, even when we offer a discount, say they can’t afford it.
“I wish everyone a season’s greetings, all the best and that next year everyone can afford it!”
(Writing by Alexander Marrow, editing by Louise Heavens)