OT: Russian Far East region plagued by rising prices (including fuel)

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Russian Far East region plagued by rising prices

Source: BBC Monitoring Former Soviet Union - Economic Publication date: Feb 06, 2000

Food prices in Russia's Far Eastern Maritime Territory have been rising steeply despite subsidized imports from the USA, and a further wave of general price increases is expected soon, according to the 'Nezavisimaya Gazeta' newspaper.

The following is the text of the report by Vladimir Aleksandrov, published in the newspaper on 3rd February under the headline:

"In the FarEast they will tighten their belts - Maritime Territory expects significant increase in prices":

Last year, Maritime Territory lost 18,000 people - 10,000 of them by natural causes. This is 10,000 old people who died, the sort of people who are unable to feed themselves. Today in Maritime Territory the cost of the consumer food basket isR1,089.

In October 1999, at a roundtable discussion held with the participation of the Territory's leaders and heads of leading food enterprises of Maritime Territory, questions of supplying the Territory with food were discussed. We may recall that at that time, all those present came to the conclusion that there would be no collapse of prices until at least January 2000 and that Maritime Territory residents would not have to go hungry. And so it was - prices held steady.

However, already on 14th January the leading producer of the number one commodity item - a certain Vladkhleb open joint-stockcompany, which supplies 30 per cent of all the bread consumed in Vladivostok - announced a 30-per-cent price increase. Podolskiy,the most popular variety of bread, now cost R6.5 instead of therecent R5. Only for 20,000 Vladivostok veterans will the priceremain preferential - R3.60 per loaf. Many other bakery enterprises are still in no hurry to increase prices - so that at least for some time (not too long) city residents will be able to buy bread a little cheaper. As the company's representatives announced, Vladkhleb has been operating at a loss for all of November and December and cannot hold down prices any longer. This is associated primarily with the increased price of flour and fuel.

If we appraise the situation as a whole, the consumer price index has increased by 32 per cent compared with last year.Taking into consideration the fact that price formation issignificantly influenced by the supply of foodstuffs and rawmaterials from the USA under commodity credit, whose prices arenoticeably lower than those set in the Territory, the prospects are bleak altogether... [newspaper's ellipsis]

However, if prices continue to grow even when foreign aid drives them down,then what would happen if we were left to our own devices? Specialists are predicting a significant leap in prices by the end of January or beginning of February.

In January, the number of trade operations declines significantly - the entire month is practically one long holiday. Companies trading in foodstuffs usually do not review their pricing policy until the end of the month. So that at the end of January, when merchants will define the new prices,products will become significantly more expensive.

And there are several reasons for this. To start with, as of 30th December the Russian Federation Ministry of Antimonopoly Policy and Enterprise Support introduced new railway tariffs, raising themby 15 per cent. The local mass media noted that one more increase was expected - prices for fresh frozen fish would riseby as much as 50 per cent. Excise tax has been increased andcertain benefits have been repealed... [newspaper's ellipsis] Aside from this, the Dalenergo open joint-stock company has once again raised the question of increasing rates for electric energy - and Maritime Territory is threatened with a large-scale leap in prices.

For the present time, the situation is being retained within predictable limits. But how long this will last - no-one knows.It is unlikely that local goods producers will be able to painlessly tolerate an increase in retail prices for their products - and this, in turn, would undercut the entire Maritime economy... [newspaper's ellipsis]

Publication date: Feb 06, 2000 ) 2000, NewsReal, Inc.

Link:

http://beta.newsreal.com/cgi-bin/NewsService?osform_template=pages/newsrealStory&ID=newsreal&storypath=News/Story_2000_02_06.NRdb@2@16@3@3&path=News/Category.NRdb@2@7

-- Carl Jenkins (Somewherepress@aol.com), February 07, 2000


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