Wednesday, December 15, 2004

New Year Glum As Prices Soar

The St. Petersburg Times

Tuesday, December 14, 2004

By Irina Titova

With New Year just a couple of weeks away, many Russian are looking to the future not with joyful anticipation of holidays or optimism, but with dread of financial instability and rising prices.

"I don't feel excited about the New Year holidays because, as usual, on Jan. 1 prices will shoot up," said Tatyana Rybkina, 42, a teacher.

St. Petersburg residents already have an impending taste of the doom approaching them; long lines have formed at metro stations ever since it was announced that the cost of one ride on public transportation services in St. Petersburg price will rise from 8 rubles (28 cents) to 10 rubles (36 cents) on Jan. 1.

As they did in Soviet times, people not only tried to buy as many tokens as they could to save money, but they also hoarded them because they feared that there might not be any left because others are also hoarding them.

The metro first limited sales to 10 tokens at a time, but this has now been reduced to two tokens, meaning people have to line up every second ride. On Tuesday, a new type a plastic card will be issued in place of tokens.

"It's very hard for me as a pensioner to have prices going up for transportation when from next year we pensioners will no longer be able to ride for free," said Tamara Sokolova, 60, who boosts her pension by working as a librarian. "My income is 3,000 rubles ($107), and now I'll have to pay about 500 rubles a month on public transportation all together."

She doesn't "experience any joy expecting New Year, because nowadays New Year automatically means prices go up," she added.

"It's a modern gift for this holiday from our government - they increase the prices of everything - food, fuel, services, etc," she said.

In Soviet times prices would go down before the New Year holidays, she added.

Food prices have been skyrocketing in recent months, she said.

In early fall, Sokolova could buy 10 eggs for 23 rubles, while the same number costs 32 rubles.

The price of meat in markets has doubled since spring; a kilo of beef or pork cost 100 rubles in May, today it's 200 rubles and more, Sokolova said.

Consumer price inflation is 11.9 percent this year, RIA Novosti reported.

According to the Federal Statistics Service, egg prices rose 12.9 percent in November and 24.3 percent for the year to date.

The service said milk prices rose 6.6 percent and meat prices 1.7 percent in November. Experts say the rising food and transportation prices are related to rising fuel prices.

Valery Nesterov, an oil and gas analyst at Moscow's office of brokerage Troika Dialog, said the prices for oil in Russia doubled between October 2003 and October 2004.

Thus, if at the end of 2003 a liter of A-92 gasoline in St. Petersburg cost 8 or 9 rubles, this month it costs almost 16 rubles. The rise has been so great that it stimulated President Vladimir Putin last week to ask Vagit Alekperov, head of leading oil company LUKoil, to lower prices for oil products on the domestic market.

Putin expressed his hope that if LUKoil did so, other big oil companies would follow suit, which would improve the situation that "one cannot describe as normal."

On Friday, State Duma deputies also expressed their deep concern about fuel prices, saying they were holding back economic development.

Alekperov said LUKoil will lower its domestic wholesale but that it is no less important that oil retailers do the same. Troika Dialog's Nesterov said that although Putin's approach to Alekperov was unusual, it was still a positive moment.

"Such action creates an image that the government is working and cares about the economic situation in the country," Nesterov said in a telephone interview. "However, it's better not to rule by giving such kind of directions, but to do so by a providing well-balanced economy and preventing the influence of monopolies."

Dmitry Belousov, an expert with the Center for Microeconomic Analysis and Short-Term Factors, named several other factors that he linked to rising prices.

Rising grain prices led to higher meat prices because of the fodder feed to livestock. The stabilization of ruble in relation to the dollar led imported goods getting more expensive, there had been fears about banks, and the dollar had depreciated. At the same time prices for communal services had gone up.

The effects of these had hit some sectors of the population harder than others, he said.

"Today prices for the poor grow quicker than for the wealthy," Belousov said. "The prices for household equipment, which are products that mainly interest the well-off are stable. Prices for products such as bread and communal services, which are of bigger demand among the poor, are rising."

Sokolova said that her librarian's wage, which is paid by the state, is supposed to be raised in line with rising costs, but the raises never catch up with runaway prices.

"I feel that I'm catastrophically short of money," she said. "Today I have to think hard about buying meat. Usually, we buy it only by for a festive dinner."

Ordinary Russians not only have to count their kopeks when it comes to buying food, they say they barely have enough money to buy clothes.

"I can't afford to buy good clothes," Sokolova said. "That's why I can't buy good quality winter shoes for 2,500 rubles and I buy lower quality ones for 1,000 rubles. Such shoes wear out very quickly, I mend them, and wear them again."

Nadezhda Chekhovich, 50, a historian who works at one of the city's scientific institutes, said her monthly salary is 1,700 rubles.

"I buy only secondhand clothes," Chekhovich said.

The prices for books and concerts, products that are important to her, have doubled in recent times, she said.

However, not all are down about life, even if it is becoming more expensive.

Pensioner Alexander Vasserman, 60, said he is not depressed about the economic situation despite his low income.

"I'm sure there are always at least two ways out of a difficult situation," he said. "Sometimes there are even more ways out. It means we'll find a way out that will enable us to live no worse."

"For instance, instead of complaining about the metro getting more expensive, I will ride a bicycle because it's healthy and free," he said.


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