ERR in Moscow: Government can no longer deny the economic crisis

Neeme Raud, ERR's Moscow correspondent (ERR)
1/13/2015 12:26 PM
Category: International

ERR's Moscow correspondent Neeme Raud talked to Vikerraadio about the economic crisis and price hikes in Russia.

Raud told Vikerraadio's morning program that the Russian government is no longer able to conceal the true extent of the economic crisis. He referred to a current headline in Gazeta.ru, which preducts that the inflation is about to go through the roof. "Last year, the inflation in Russia was 11.4 percent. The expert forecast for this year is 15 percent, twice as high as the official prediction," he said.

"The newspaper writes that the private and banking experts seem a lot more reliable these days than the cabinet, which tries to gloss things over," he added.

"According to the paper, the inflation is spearheaded by the falling ruble, situation in the oil market and the West's sanctions against Russia, as well as the economic sanctions implemented by Russia itself. It also notes that only two of its neighbors - Belarus and Ukraine - have higher inflation."

Raud said that the inflation is expected to hit the roof in April and then undergo a gradual fall. This is what the Morgan Stanley investment analysts predict, Gazeta.ru reported.

Raud confirmed that everything is getting more expensive. "For instance, the Russian Ministry of Communication announced today that the prices of newspapers and magazines will increase by 30-50 percent this year."

Whereas gas prices are dropping all over the world, Russia is a rare exception. "Last year, gas was 7,6 percent more expensive than in 2013, and the prices continue to increase. Today a liter of petrol still costs under 50 euro cents, but for Russians who are accustomed to cheap petrol, this is expensive," Raud said.

He added that the effects of the sanctions can also be observed in the shops. The cheese counters, he said, are rather empty. "The local and Swiss cheeses are still on offer, but all the European brands that were previously marketed in Russia are now gone because of the sanctions."

Rosstat, Russia's Federal State Statistics Service, reported that the price of the average food basket increased 15.3 percent in 2014, reaching 3,297 rubles, which is around 44 euros. According to Raud, electronics, computers and travel have also become more expensive.

A. Krjukov, M. Oll

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