Russia’s central bank raps efforts to control prices

Russian Central Bank chief Elvira Nabiullina criticised Wednesday government efforts to cap food prices as authorities seek to rein in soaring inflation on President Vladimir Putin’s orders.

Consumer prices have been climbing since March 2020, driven by a slump in oil prices and a drop in the ruble’s value after months of historically low inflation.

In December, Putin ordered ministers to introduce emergency measures to cap prices of basic foodstuffs such as sugar and sunflower oil.

Speaking at a forum on Wednesday, Nabiullina said it was important not to “get carried away” by price regulation.

“I believe it’s necessary to drop price controls as soon as possible because it distorts price indicators in the economy and discourages the development of production,” she said.

Speaking at a meeting in March, Putin said there was “nothing wrong” if producers reduced their “excess profits”.

But some businesspeople in Russia have spoken out against administrative price controls, saying such measures could deal a painful blow to major retailers with already low profit margins.

High prices are a particularly sensitive topic for the authorities ahead of parliamentary polls this autumn.

Observers say that rising poverty, falling incomes and lack of tangible government support during the pandemic are fuelling discontent with Putin’s two-decade rule.

The coronavirus pandemic has delivered a new blow to Russia’s stagnating economy, which was already chafing under Western sanctions, low oil prices and weak corporate investment. © Agence France-Presse

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