Russia’s top supermarket chains are to freeze prices on basic foodstuffs for two months, soaking up the costs as food is expected to eat up half of Russians’ incomes this year.
The retailers plan to freeze prices on 20 socially important items in an attempt to stabilize the food market, the Association of Retail Stores (AKORT) said on its website last week.
“The supermarket chains are certain that their actions will help stabilize the situation on the food market, in the interests of the population”, the Association said.
Retailers want to show their socially responsibility as food prices rise following the ruble’s plunge of over 40 percent to the dollar and the food import bans.
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Twelve retail chains such as Magnit, Auchan, Dixy, Lenta, O'Key, Billa, Globus, Metro Cash & Carry and the X5 Retail group have signed the initiative, which has been already approved by Russia’s Anti-Monopoly Service.
The Association hasn’t specified the list of products covered, but as Vedomosti reported earlier it’s likely to include beef, pork, lamb, chicken, fish, milk, sugar, salt, sunflower oil, grains, potatoes, cabbage, carrots and apples.
The share of the Russian family budget spent of food jumped from 36 percent to 40 percent in the last months of 2014, Vedomosti said citing a review of Russian food retail by VTB Capital. The share of food costs in household spending is expected to increase to 55 percent by the end of 2015. In February Russian inflation reached 9.6 percent according to VTB Capital.
The government supports the decision by the retailers to freeze prices, Deputy Prime Minister Arkady Dvorkovich said in an interview to Rossiya-24 Television Channel. However, this could lead to a rise in price of other products, Dvorkovich added.
"Freezing prices may lead to an increase in prices of other goods, but I hope it will be not be so harsh and the situation will be stable”, he added, saying there is work on amendments to the trade law, which are aimed at transparency in the relationship between retailers and producers.