It's horrifying enough for a Western consumer to contemplate living with the overall consumer price inflation rate faced by Russians, which the country's Federal State Statistics Service (Rosstat) projects will be 7-8% in 2007.
But as La Russophobe has previously reported, the overall inflation rate is not the one that really matters in Russia. Rather, the one that matters is the price rise on the small "basket" of goods and services that the average Russian, who earns $2.50 per hour, can actually afford to buy.
Rosstat says Russian overall prices rose 0.6% in April, and 4% in just the first four months of 2007. That puts Russia on pace to experience 16% overall inflation this year, yet Economic Development Minister Herman Gref has said he believes actual price increases will be only half that total.
But the price rise on the basket of basic foodstuffs purchased by average wage earners didn't increase by 0.6% in April, its price rise was 30% higher -- 0.8% -- and for the first quarter the price rise for the basic basket of food was not 4% as for the general economy, but 5.5% (nearly 40% higher than the overall total).
Fruit Institute FreshPlaza states the the price of fresh fruits and vegetables rose at an even faster clip:
In January of 2006 fruit and vegetables amounted to 22% of the cost of the minimum food basket in Russia. Fruit and vegetables are the products which prices rose the most rapidly in between January and April of 2007. Vegetables prices rose by 6.5% on the average, including cabbage – by 14.5%. Prices of the fruit grew by 1.9%. Bananas and lemons became dearer - respectively - by 6.2% and 4.3%.This is the same as saying that the average person's wage of $2.50 per hour became 5.5% less valuable in the first quarter of 2007 -- declining to about $2.35 per hour. Based on this precedent, an average wage earner could expect the value of his salary to fall because of inflation below $2.00 per hour by the end of the year.
And this is all based on data that the Kremlin admits -- but the Kremlin is the sole source of the data. Anyone even casually familiar with Russia knows perfectly well that the Kremlin would have no problem whatsoever fudging this data to hide the most embarrassing facts and make itself look better. In other words, this is the rosiest possible picture of the state of Russian consumer prices. The actualy reality is undoubtedly far bleaker, as anyone who spends time living with actual Russian people in the actual country of Russia knows full well.