Butter prices are exploding in Russia: Putin's economy in crisis!

Butter prices are exploding in Russia: Putin's economy in crisis!

Shopping in Russia becomes a challenge! Butter prices in particular are skyrocketing, and this is having dramatic consequences for the population. The Western sanctions imposed in response to the Ukraine war are now showing their devastating effects. To deprive Russia of the financial means to continue the war, strict measures have been taken, including a ban on imports of Russian diamonds and an oil price cap of $60 per barrel. These sanctions have severely affected sales in Russia, such as Mercury reported.

The situation is alarming: since the beginning of 2024, the price of butter has increased by almost 25 percent, and for a certain brand even by up to 34 percent, to 239.96 rubles per pack, which corresponds to about 2.23 euros. This price explosion has led to a rise in thefts in supermarkets as many consumers try to secure the expensive butter. To combat this, some stores have already implemented safety precautions that typically only apply to luxury items like caviar or premium alcohol.

The butter crisis and its causes

Russia is traditionally a butter importing country, with imports worth $163 million in 2022, while exports were only $10.2 million. Argentina was the main supplier, but Western sanctions have severely restricted imports. Loud HNA Butter exports from Latin America fell from 25,000 tons in 2014 to just 2,800 tons. The Russian authority Rosselkhoznadzor has also pointed to supply chain problems and a lack of agreements between companies.

Inflation in Russia is also worrying. In September 2024, the inflation rate was almost 9.8 percent, while the central bank is aiming for a target of just four percent. This high inflation has led the central bank to raise the key interest rate to a record high. Economists warn that the Russian economy could overheat due to the shift to a war economy. Despite stable growth numbers at the start of 2024, this is not sustainable growth and the central bank has forecast a significant slowdown.

Russia's desperate search for new exports

In order to stabilize butter prices, Russia is now relying on new exports. Authorities are closely monitoring the market situation and trying to ensure that the Ukraine war does not further impact people's daily lives. Larger shipments are reportedly expected from Turkey, Iran and India to secure butter supplies. These measures are urgently needed because the sanctions are forcing President Vladimir Putin to choose between essential goods and military spending. As the European Union's diplomatic service noted in the summer of 2022, Putin is in an ever-tightening vise.

The situation in Russia is tense and the population is feeling the effects of the sanctions directly in their wallets. The question remains how long the Russian economy can withstand this pressure and what further measures need to be taken to ensure the supply of essential goods.