Russian Economy Minister Maksim Reshetnikov said his country could restrict more food exports in an attempt to stem domestic inflation.
Russia announced a wheat export quota at the beginning of the year as domestic food prices spiked. The move was followed by the imposition of export duties earlier this month.
In an interview with the Financial Times published on June 6, Reshetnikov said Russia might widen the measures to include outright export curbs as well as a floating tariff on other goods should prices continue to rise.
Food inflation has historically been a very sensitive political issue in Russia and the Kremlin has repeatedly intervened over the past 20 years to nip it in the bud with price controls.
The Kremlin earlier this year temporarily capped the prices for staples. While it is ending most of them, it will continue to subsidize certain staples, such as bread and flour.
“There’s no guarantee that global food prices have stabilized and peaked,” Reshetnikov told the FT. “Any news about crop forecasts can provoke…yet another rally for some foodstuffs, so we are constantly paying close attention to them and taking some measures when need be.”
The measures also come as Russia prepares to hold national parliamentary elections in September.
The ratings of the ruling United Russia party have dropped sharply since the last election in 2016 following years of falling disposable incomes, which is making the recent food price jump difficult for many families.
About one in seven Russians live below the poverty line, according to the FT.
The FT said the proposed export limits have won the support of local supermarket chains, which blame increased Chinese imports of Russian foods for the domestic price surge.
However, some Russian officials have blamed the local food producers and supermarket owners for the spike, citing greed.
Russia has a competitive food retail market with a combination of large national chains and local players.
Reshetnikov hinted at higher taxes on food producers and supermarkets if they don’t reinvest more of their profits into expansion and upgrades.
“If you invest all your profits, even if they’re very high, in new production, development, research, and so on, that’s one thing. If you pay dividends, which is also fine…it may well be that another tax level is appropriate to stimulate investment in business,” he said.
