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Putin has promised that his country can focus on both “guns and butter” during the fight in Ukraine.
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Yet it is precisely butter that worries Russia, with a price increase of 25.7% this year.
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Rising costs are raising fears of renewed inflation in Russia amid sanctions and war production.
A year after his war against Ukraine, Russian leader Vladimir Putin told his country that the new focus on weapons production would not harm the economy.
“There is a well-known expression: weapons instead of butter,” Putin said last February.
“The defense of the country is of course the main priority, but in solving strategic tasks in this area we must not repeat the mistakes of the past, we must not destroy our own economy,” he said, citing burgeoning wheat production . at the time.
In May, Putin again ordered his government to continue pursuing that goal, telling officials to focus on both “weapons and butter” — rejecting the adage that countries must choose between military and civilian spending.
But as the war rages on, the past few months have been particularly tough for Russian consumers. Inflation rates rose in August and September to their highest levels since early 2023, when Putin first delivered his speech in support of the civilian economy.
According to government statistics, the price of butter in Russia had increased by 25.7% at the end of October compared to December 2023.
Not all food and dairy prices are rising at such a pace. The second biggest increase was in lamb, which rose 21.48%, while milk rose 12.75% over the same period.
‘Armageddon with butter’
Still, the overall trend has raised fears of a return in Russia to 2022’s rising inflation rates or the possibility of a recession.
“What is especially frightening is the fact that the acceleration is accompanied by a unanimous price increase for the entire basket. Of the 107 items in the weekly basket, 84 increased in price,” wrote economists on the MMI Telegram channel, a Russian group that provides analysis of inflation.
When government statistics showed butter rising by as much as 1.9% weekly in late October, the same channel warned of an “armageddon with butter” and said Russia could see a repeat of the 40% egg price increase from November 2023.
The sharply rising prices made national news earlier this month when Russian media reported a series of butter-related supermarket thefts.
Independent outlet Meduza reported that a robbery in Moscow involved 25 packs of butter stolen by two men.
Even state media have raised the issue, with the government-run Rossiyskaya Gazeta writing that some stores were putting butter in protective boxes.
Federal officials have since met with dairy producers in an effort to curb cost increases, though the local union promised in late October only that it would monitor prices weekly.
Why butter prices are rising
A week before that meeting, the same union said the country was not experiencing a butter shortage, but added that about 25% of local butter consumption comes from foreign suppliers.
Much of these imports previously came from countries in Latin America, which saw their butter shipments drop from 25,000 tons to 2,800 tons per year due to Western sanctions on Moscow.
Another major dairy supplier that adhered to wartime sanctions, New Zealand, was selling $88.8 million worth of butter annually to Russia before the invasion began.
To fill the butter shortage, Moscow has since turned to friendly countries such as Turkey and the United Arab Emirates, which previously supplied Russia with only about 90 tons a year.
Price turmoil continues to play out as Russia continues to focus its economy on weapons production to sustain its invasion of Ukraine, which has now increasingly turned into a war of attrition of manpower and equipment.
Russia is expected to spend $140 billion on its defense industry in 2024, rising to $145 billion in 2025, or 6.3% of its GDP.
That could mean more bad news for Russian consumers, with economists expecting further tax increases on top of announced reforms for 2025 to keep pace with military spending.
Read the original article on Business Insider
