Russia bids to freeze food prices

By Steven Eke
BBC Russian affairs analyst

A recent surge in food prices has alarmed the Russian government

Russia's largest food producers have signed an agreement with the government in Moscow to freeze prices on a range of basic foodstuffs.

The agreement, due to run until the end of January next year, is aimed at curbing high food inflation hitting millions of low-income families.

It has been criticised by some economists as a throwback to Soviet-style central planning.

Food prices were then set by the state, staying unchanged for decades.

Critics say it is populist move, aimed more at shoring up support for President Vladimir Putin and his allies ahead of parliamentary and presidential elections.

Food inflation has become a political issue in many countries over recent months, especially due to record wheat prices.

But in Russia, where official statistics show millions of people still living below the poverty line, it has become a major problem.

Even relatively affluent families are complaining bitterly about galloping prices.

Soviet echoes

Now, the government says it wants food producers and retailers to curb food inflation.

Critics accuse President Putin of populist moves, ahead of polls

From Wednesday, the prices of bread, eggs, vegetable oil, sugar, as well as certain cheese and milk products, will be regulated.

The government insists the agreement is voluntary, and blames monopoly producers for artificially increasing prices.

However, some of the biggest food producers say they have been compelled to abide by the agreement, and warn the measure will create difficulties for their companies.

It is the widest-reaching direct government intervention in the pricing system since central planning was abolished more than 15 years ago.

A number of economists have warned that centralised controls are not an appropriate way of dealing with food inflation.

They have linked the government's moves to the forthcoming elections, suggesting a popular backlash against price rises could dent the ratings of Mr Putin and his parliamentary allies.

Two-and-a-half years ago, mass demonstrations by pensioners forced the government to abandon plans to reform Russia's social security system.