Food prices have risen more in the first days of the new year than a year ago. Fears of accelerating food inflation have been embodied in the nervous and ironic reaction of social networks to the appearance of a new package of eggs on sale – not the usual ten, but nine eggs at the price of the previous ten.

Rosstat reported that from January 1 to January 9, 2019, the consumer price index increased by 0.5% compared to December, compared to 0.2% for the same days in 2018. Fresh vegetables in stores have expectedly increased in price the most: cucumbers - by 8.4%, tomatoes - by 6.1%, cabbage - by 4.6%. Prices for buckwheat, flour, sugar, bread, fish, sausages, milk, sour cream, cheeses, meat and poultry have also increased by 0.1-1%. A year earlier, prices for many food products even decreased by the end of January, but the bad news of 2018, including fluctuations in the ruble exchange rate, an increase in the retirement age, and an increase in the tax burden, led to an increase in inflation expectations. If in December 2017, according to the Central Bank, 20% of respondents believed that prices for goods and services would rise “very strongly” in the coming month, then in December 2018, 29% thought so.

The producer of eggs packaged in boxes of nine, the Udmurt poultry farm Varaksino, assures that this is just another packaging option proposed by a customer from St. Petersburg, and that they are not going to abandon the usual 10-egg packages. This is apparently another manifestation of shrinkflation (shrink – to shrink) – a reduction in the volume of product packaging by manufacturers in exchange for maintaining retail prices, which has been known in Russia for more than 10 years. But it is not so easy to notice the reduction of a liter bottle of milk to 0.97 l, and a kilogram of sugar to 0.95 kg, but you can’t confuse nine eggs with 10. True, eggs, unlike many other products, were much cheaper in 2017 than in 2015 and 2016. The low base effect, as in the case of eggs, is one of the factors in the growth of food prices in 2018, according to Rosstat, the other two being the rise in fuel prices (which increased transport costs) and the weakening of the ruble, which made not only imported goods more expensive, but also Russian ones, in the cost of which the share of the imported component is noticeable.

Dmitry Vostrikov, Director of the Association of Producers and Suppliers of Food Products "Rusprodsoyuz", predicts that in the first quarter of 2019, consumer prices will grow by as much as 8%. It sounds threatening, but unlikely, believes Mikhail Burmistrov, CEO of "Infoline-analytics": in the conditions of stagnant consumer income and growing competition, retailers are already selling 30-40% of goods on promotions and have long been unable to fully shift growing costs to the price of goods on the shelf, so they and suppliers have to sacrifice margins. In 2019, inflationary pressure on manufacturers and retailers will increase, notes Burmistrov: due to the rise in fuel prices, which are still being artificially restrained, and the share of expenses on it in the final cost of goods will grow - plus excise duties and taxes are growing, and the ruble will continue to fall. But nothing foreshadows a rapid growth in income among the population - so we must wait for new creativity from manufacturers.

Chicken and egg inflation