As the war grinds on in Ukraine, Russian
President Vladimir Putin
is trying to project
an image of economic stability in Russia.
But it's proving difficult.
Joining us now is Claire Sebastian.
You've been looking into this. Yeah.
So obviously inflation is a problem
in Russia.
We've seen it accelerating
since the summer.
At the same time
as the rest of the world has seen it
coming down.
So this is obviously unique to Russia.
It's directly linked to the war,
which we're going to in a minute.
But I think
what is more important about this
is that it's
not just about a gradual rise
in overall prices,
but what we're seeing
is that certain supermarket staples
and in particular we're looking at eggs
have gone up dramatically.
It's something like 60% every year.
It was almost 20% between November
and December.
That increases
the likelihood
that people are going to notice it
and they're going to start
to make the connection
between their grocery baskets.
And the war.
And what we're seeing is that
that is a situation
that the Kremlin has not been able
to ignore. Look,
there are higher.
The dollar is awash in money.
When your husband spoils
you with expensive presents,
reads the caption,
and social media brimming with egg means
they're making light of a new feature
of Russia's upside down war economy.
A sudden and unexpected price rises.
President drive
an hour outside Moscow, though,
and it's no
laughing matter for these pensioners.
Yes, it is not.
Of course we know it.
The pension is 13,000 rubles, says ruble.
That's less than $150 per month.
More meals.
Maybe we buy less meat, says Nadezhda.
There's still enough for medicines.
Egg prices rose 18% in December alone.
Russian official data shows
more than 60% over the year,
far outstripping
overall inflation at 7.4%.
These are still more questions
there as images spread of lines
forming outside supermarkets.
This purportedly
from Belgrade in December.
Russia's president
forced into damage control mode
socially precociously is union.
I am sorry about this
and want to apologize for this problem.
This is a setback
in the government's work,
although they say this is not the case.
I still think it is.
The problem
is related to a failure to increase
imports enough.
The government took
the not-so-subtle hint.
Eggs were exempted
from import duties for six months
and shipments started arriving
from Turkey, Azerbaijan
and staunch ally Belarus.
Also ramping up supplies.
Its president
unable to resist a rare dig.
A new term
put through our own production covers
our needs in terms of grain,
pork, chicken, milk, vegetable oils
and chicken eggs.
No. Stop stuffing.
Send some to us.
Don't be greedy.
In Putin's surprisingly resilient war
economy, the egg crisis reveals
the biggest problem is not decline,
but overheating.
Sees,
Putin says this is about higher demand
because of slightly higher wages.
Partly true, economists say.
But what Putin doesn't say is
why wages are up.
This labor shortage is a huge issue.
Where does that come from? Mobilization.
I think to me,
the key issue
here is the fact
that there are a lot of deaths at war
and then they have to be replaced
as people have to be replaced.
The Russian officials
are trying to keep it very quiet.
The numbers of how many people have died.
The weak
ruble, a direct
result of sanctions
has also pushed up import
costs for poultry producers.
And then there's the war time spending.
The budget for 2024 envisages
even adjusted for inflation,
record levels
of federal government expenditure.
So when you put that alongside
a supply side tightness
with a massive increase
in demand driven by the state,
you've got a recipe for inflation.
Chile's President
Putin now poised for the next price
spike A threat
to his image of stability
ahead of March elections,
though likely not
his presidential shelf-life
So it's not exactly a crisis
for Putin yet,
but it is
something that we are going to continue
to see the sort of Whac-A-Mole situation
where the Kremlin has to deal
with these pockets
of overheating as they happen
Now, obviously,
what this shows us deep down,
especially if you look
at the Russian budget
this year,
is that they are putting the wheel first
and the people are going to have to keep
paying the price.
Defense spending
according to projections for this
year, will be triple
what it was before the war.
They're paying more
to service their debt,
which they didn't even have
for any before the war
than they are on health
care and education.
Interest rates
are back up at some 16%,
which is close to the peak that we saw
at the start of the war.
So people are increasingly
paying for this.
And I think the question is
how many people
when people start to make the connection
between this
and the war,
especially as we're starting
to see the seeds of that already,
some sort of pockets of anti-war
sentiment rising.
And I think this is why the Kremlin
cannot afford to ignore this.
Okay. Thank you so much.