Prices Rise In Russia
Yesterday, exactly on the eve of Dmitry Medvedev’s inauguration as president, Russia brought into force new prices for domestic gas, power and railway services which will rise over the next four years. As a result, around two million people took part in May Day demonstrations in 1,000 towns across Russia.
People were reported to be shouting, “No to high prices!” and Putin’s plan means high prices, and this might yet prove to be one of the most problematic problems which Medvedev will inherit from Putin. The Financial Times quotes Andrei Klepach, Russia’s deputy economy minister, as saying that because of inflation fears the government has to liberalize gas prices in order to bring them in line with European ones.
Andrei Klepach, Russia’s deputy economy minister, said the increases in tariffs, which had been heavily subsidised for years, had been designed to keep “significant” inflationary effect to a minimum. The government also stepped back from a plan to liberalise gas prices to bring them level with European ones because of inflationary fears.
However, the prices rise also for food. Putin Watcher blog quotes Aleksei Gordeyev, the Russian agriculture minister, who sees the reason for rising prices linked to global population growth.
“Along with the 1 billion members of the upper class residing in developed nations, the middle class in China, India, and Vietnam is increasing by 800 million people,” he said. “The need for food products is increasing sharply. Another serious factor is that a lot of biomass — mainly grain and oil cultures — is now being used for the production of biofuel.”
Photo: © World Economic Forum
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