FX.co ★ Russia versus EU: where food prices more affordable

Falling consumer spending in Russia is a thorny issue for economists. Consumer activity of the Russian nationals has been contracting while inflation of food prices has been on the rise. Russia’s federal statistics agency reported a downbeat CPI for November 2019. Let’s compare headline inflation in Russia and the countries of the euro block.

In November 2019, food prices in Russia climbed 0.6% month-on-month. Food inflation surged 1.9% from November a year ago. According to Eurostat, food prices rose moderately by 0.3% in November. Separately in the eurozone, the Czech Republic, Cyprus, and Bulgaria are the countries with the fastest food inflation in the reporting month (+1.0 – 1.5%). For the whole 2019, food inflation was the highest in Poland, Slovakia, and Hungary (+5.4 – 6.1%).

Eurostat estimated that prices of vegetables, fish, seafood, raw meat, and processed meat gained the most in October 2019. The fastest inflation of vegetable prices was recorded in Cyprus (+7.5%), followed by the Czech Republic, Bulgaria, and Hungary (+3.2 – 4.5%). Prices of fish and seafood climbed the most by 3.4% in Estonia and to a lesser extent in Spain, Hungary, and Slovakia (+1.1% - 1.2%). Inflation of meat products prices accelerated the most in Bulgaria (+2.2%), Czechia (+1.8%), and Romania (+1.1%).

Residents of Russia complain about considerable consumer inflation. Domestic analysts reckon that vegetable prices posted the highest growth of 6.6% last month. Dairy products, cheese, and eggs gained 1.0% in Russia, while these items showed modest 0.3% inflation in the euro area. Fish and seafood prices in Russia grew 0.4%. Only prices of meat products remained flat. On the whole, consumer inflation in Russia increased 0.3% in November. By contrast, consumer prices in the EU declined 0.2% in the same month. In November 2019, inflation of basic food prices in Russia was twice faster than in the EU.

The broader picture is also not in favor of Russia. In 2019, the eurozone’s consumer price index rose 1.3%. However, consumer inflation in Russia was more than twice higher in the whole 2019 with the CPI at 2.7%.