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Bread prices soar in drought-hit Russia

The impact on bread and other cereals prices is usually very quickly evident, while it takes around three months for the effects to register on pasta and dairy products, and between six and 12 months for meat and poultry.
by Staff Writers
Moscow (AFP) Aug 11, 2010
The price of Russian bread is rising sharply in Moscow as repercussions from the country's months-long record drought start to have an impact on the cost of food supplies.

In Moscow markets, the price of a loaf of bread has soared by 20 percent in just a few days, going from 15 roubles (0.38 euros or 0.49 dollars) to 18 roubles.

Moscow bread-sellers have started posting signs warning customers that they will have to dig deeper in their pockets to afford cereal-based foods.

"Due to the rise in the price of flour (the supplier has announced a hike of 30 to 50 percent depending on the type), the price of bread products will rise on average 12 percent," one window sign said at a shop in south Moscow.

Cereal products are the first foods to be hit by Russia's record-breaking drought, which began in April and has worsened since the start of July when the country was also hit by a heatwave.

Russia has seen at least 10 million hectares (25 million acres) of land destroyed in the drought.

On Monday Russia's Prime Minister Vladimir Putin revised the grain harvest for 2010 to 60-65 million tonnes, which represents a massive fall compared with its 2009 harvest of 97 million tonnes.

Last week, Putin shocked international markets by announcing that from August 15 Russia would ban exports to keep prices down at home and ensure there was enough feed grain for its cattle herd.

The prime minister said Russia required 78 million tonnes of grain for its domestic needs and would be able to cover the shortfall with 9.5 million tonnes from a state fund and 21 million tonnes left over from last year's harvest.

Agriculture Minister Elena Skrynnik assured on Wednesday that "all the measures currently being undertaken let us hope that we will meet the demand for cereal in the country," she said, quoted by the news agency Interfax.

But the government faces a number of future challenges as prices for other foods could also start to rise in the coming weeks, speeding up the long-running problem in Russia of inflation.

The bank ING has already revised its forecast for 2010 and 2011, with an estimated 8.5 to 9.5-10 percent rise in consumer prices, up from their previous prediction of 6.8 to 7.6 percent.

The impact on bread and other cereals prices is usually very quickly evident, while it takes around three months for the effects to register on pasta and dairy products, and between six and 12 months for meat and poultry.

Faced with these prospects, Russian authorities have announced they intend to put a cap on prices of twenty or so food products.

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