【Epoch Times, November 11, 2024】The invasion of Ukraine by Russia has already begun to impact the lives of ordinary Russians, with prices of many daily necessities soaring. A recent case of butter theft in Yekaterinburg, the third largest city in Russia, has highlighted the costs of war on the Russian economy.
In early November, a dairy store in Yekaterinburg was robbed. Surveillance footage from the store showed two masked thieves entering, with one stealing money from the cash register and the other heading straight for the shelves filled with butter, ultimately stealing 20 kilograms of butter.
Scholars studying Russian issues have stated that the butter theft case illustrates the impact of skyrocketing inflation on the Russian wartime economy.
Alexandra Prokopenko, a researcher at the Carnegie Russia-Eurasia Center in Berlin, told the Financial Times, “Under normal circumstances, butter production plants would be more than willing to meet demand and could operate on three shifts, but they do not have enough manpower to hire. You cannot simultaneously combat inflation and war.”
To cope with the conflict in Ukraine, the Russian government has increased defense spending, with next year’s budget expected to reach a record 13.5 trillion rubles (approximately $145 billion), but the prices of essential goods for ordinary citizens are skyrocketing.
The Central Bank of Russia estimates that the country’s inflation rate could reach 8.5% this year, twice its target. The central bank raised its key rate to a record 21% in October to curb inflation.
With the government expanding defense spending, industries related to the defense sector in Russia are ramping up production, with many factories operating on three shifts. This has led to a record low unemployment rate of 2.4%. However, employers in other industries are suffering. In order to compete for manpower with defense-related industries, they have had to raise wages, resulting in significantly increased costs and subsequently raising product prices.
Central Bank Governor Elvira Nabiullina told the Russian State Duma at the end of October that the sustained high inflation “indicates that demand significantly exceeds the economy’s production capacity,” and “in some industries, there is almost no idle equipment, not even outdated machinery.”
The prices of daily necessities are rising faster than the overall inflation rate. For example, the price of butter has increased by 26% in a year.
The butter theft case is not unique to Yekaterinburg. Many stores have begun selling butter in plastic boxes with magnetic locks to prevent theft.
Due to sanctions from European and American countries, Russia’s export income has significantly decreased, the ruble is hard to exchange, and the cost of imports into Russia has risen.
A Russian woman mentioned that she bought her daughter a winter thermal underwear this year that was only one size larger than last year, but the price had doubled.
She said, “I don’t understand why some people say there hasn’t been any change. Can they deny so much reality?”
Of course, the impact of rising prices on daily necessities varies among different groups of people.
According to data from Russia’s national statistics agency, Rosstat, over the past seven years, wages in the IT, heavy industry, and construction sectors have increased by 170%; however, in the fields of education and municipal services, wage growth has only been between 10% to 20%.
(This article referenced reports from the Financial Times)