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11 Jul, 2007 23:34

Bread price in Russia goes up

The price of a loaf of bread in Russia has gone up by three per cent and is expected to increase by a further 20 % in the next two months. Both weather and local authorities inefficiency are said to be to blame.

In thirteen of Russia's regions bread has gone up by an average of 3%. The worst hit are the Sverdlovsk region – which has seen a 10% rise, as well as Chelyabinsk and Tula with a 5%  and 7% rises respectively.

The official reason for the price hike is the weather. As result, the harvest this year will be less than expected.

It is true the price of grain has gone up all over the world, mainly because of last year's drought, which hit many areas hard. But Russia does not import grain. The first reports of this year’s domestic grain production in Russia were optimistic.

“Even in this year’s extreme circumstances, we've processed more grain than last year,” remarks Aleksander Tkachev, Governor of the Krasnodar region.

The cost of grain only makes up 20% of the overall cost of a loaf. Taking account of this and the fact that this year's harvest was no worse than usual – the Minister of Agriculture, Aleksey Gordeev, has laid the blame on local governments.

In the Tula region, a special commission has been set up to investigate. It brings together the Antimonopoly Commission, the Bread-Baking Union and the FSB – Russia's secret service – suggesting corruption is suspected.

The agricultural sector presents a serious problem to the Russian government. It has been starved of investment since the collapse of the USSR and it is still one of the most underdeveloped areas of the Russian economy.