[Marxism] Rising prices in Russia

Ernie & Jess mackenzie.tate at sympatico.ca
Tue Dec 14 14:50:19 MST 2004

As part of Russia's agreement to enter the World Trade Organization, 
expected to take place in 2007, the Putin regime agreed to European 
Union demands to allow energy prices in Russia to rise to "market 
levels".  Natural gas in Russia had been selling at 20% of what E.U. 
customers had to pay.  The following article shows the consequences for 
the workers of Russia's this further integration into the world 
imperialist system.

Ernest Tate

The St. Petersburg Times

#1029, Tuesday, December 14, 2004

New Year Glum As Prices Soar

By Irina Titova

With New Year just a couple of weeks away, many Russian are looking to 
the future not with joyful anticipation of holidays or optimism, but 
with dread of financial instability and rising prices.

"I don't feel excited about the New Year holidays because, as usual, on 
Jan. 1 prices will shoot up," said Tatyana Rybkina, 42, a teacher.

St. Petersburg residents already have an impending taste of the doom 
approaching them; long lines have formed at metro stations ever since it 
was announced that the cost of one ride on public transportation 
services in St. Petersburg price will rise from 8 rubles (28 cents) to 
10 rubles (36 cents) on Jan. 1.

As they did in Soviet times, people not only tried to buy as many tokens 
as they could to save money, but they also hoarded them because they 
feared that there might not be any left because others are also hoarding 

The metro first limited sales to 10 tokens at a time, but this has now 
been reduced to two tokens, meaning people have to line up every second 
ride. On Tuesday, a new type a plastic card will be issued in place of 

"It's very hard for me as a pensioner to have prices going up for 
transportation when from next year we pensioners will no longer be able 
to ride for free," said Tamara Sokolova, 60, who boosts her pension by 
working as a librarian. "My income is 3,000 rubles ($107), and now I'll 
have to pay about 500 rubles a month on public transportation all together."

She doesn't "experience any joy expecting New Year, because nowadays New 
Year automatically means prices go up," she added.

"It's a modern gift for this holiday from our government - they increase 
the prices of everything - food, fuel, services, etc," she said.

In Soviet times prices would go down before the New Year holidays, she 

Food prices have been skyrocketing in recent months, she said.

In early fall, Sokolova could buy 10 eggs for 23 rubles, while the same 
number costs 32 rubles.

The price of meat in markets has doubled since spring; a kilo of beef or 
pork cost 100 rubles in May, today it's 200 rubles and more, Sokolova said.

Consumer price inflation is 11.9 percent this year, RIA Novosti reported.

According to the Federal Statistics Service, egg prices rose 12.9 
percent in November and 24.3 percent for the year to date.

The service said milk prices rose 6.6 percent and meat prices 1.7 
percent in November. Experts say the rising food and transportation 
prices are related to rising fuel prices.

Valery Nesterov, an oil and gas analyst at Moscow's office of brokerage 
Troika Dialog, said the prices for oil in Russia doubled between October 
2003 and October 2004.

Thus, if at the end of 2003 a liter of A-92 gasoline in St. Petersburg 
cost 8 or 9 rubles, this month it costs almost 16 rubles. The rise has 
been so great that it stimulated President Vladimir Putin last week to 
ask Vagit Alekperov, head of leading oil company LUKoil, to lower prices 
for oil products on the domestic market.

Putin expressed his hope that if LUKoil did so, other big oil companies 
would follow suit, which would improve the situation that "one cannot 
describe as normal."

On Friday, State Duma deputies also expressed their deep concern about 
fuel prices, saying they were holding back economic development.

Alekperov said LUKoil will lower its domestic wholesale but that it is 
no less important that oil retailers do the same. Troika Dialog's 
Nesterov said that although Putin's approach to Alekperov was unusual, 
it was still a positive moment.

"Such action creates an image that the government is working and cares 
about the economic situation in the country," Nesterov said in a 
telephone interview. "However, it's better not to rule by giving such 
kind of directions, but to do so by a providing well-balanced economy 
and preventing the influence of monopolies."

Dmitry Belousov, an expert with the Center for Microeconomic Analysis 
and Short-Term Factors, named several other factors that he linked to 
rising prices.

Rising grain prices led to higher meat prices because of the fodder feed 
to livestock. The stabilization of ruble in relation to the dollar led 
imported goods getting more expensive, there had been fears about banks, 
and the dollar had depreciated. At the same time prices for communal 
services had gone up.

The effects of these had hit some sectors of the population harder than 
others, he said.

"Today prices for the poor grow quicker than for the wealthy," Belousov 
said. "The prices for household equipment, which are products that 
mainly interest the well-off are stable. Prices for products such as 
bread and communal services, which are of bigger demand among the poor, 
are rising."

Sokolova said that her librarian's wage, which is paid by the state, is 
supposed to be raised in line with rising costs, but the raises never 
catch up with runaway prices.

"I feel that I'm catastrophically short of money," she said. "Today I 
have to think hard about buying meat. Usually, we buy it only by for a 
festive dinner."

Ordinary Russians not only have to count their kopeks when it comes to 
buying food, they say they barely have enough money to buy clothes.

"I can't afford to buy good clothes," Sokolova said. "That's why I can't 
buy good quality winter shoes for 2,500 rubles and I buy lower quality 
ones for 1,000 rubles. Such shoes wear out very quickly, I mend them, 
and wear them again."

Nadezhda Chekhovich, 50, a historian who works at one of the city's 
scientific institutes, said her monthly salary is 1,700 rubles.

"I buy only secondhand clothes," Chekhovich said.

The prices for books and concerts, products that are important to her, 
have doubled in recent times, she said.

However, not all are down about life, even if it is becoming more expensive.

Pensioner Alexander Vasserman, 60, said he is not depressed about the 
economic situation despite his low income.

"I'm sure there are always at least two ways out of a difficult 
situation," he said. "Sometimes there are even more ways out. It means 
we'll find a way out that will enable us to live no worse."

"For instance, instead of complaining about the metro getting more 
expensive, I will ride a bicycle because it's healthy and free," he said.
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