Russia’s War Hits Hip Pockets

The “real world” economic impacts of war are daily illustrated in small detail on online feeds from both Moscow and Kyiv.

Russian bloggers and media sites have begun to openly discuss the “kitchen table” aspects of their country’s choice to unilaterally and illegally invade Ukraine.

Today, Russian media site Baza, called “independent” by Voice of America and other western observers, highlighted the rising price of the most basic and symbolic staple in the Russian diet – bread – and the reasons for its rise.

“In autumn, bread in Russia will rise in price by 10 per cent. This is all because of [Russia’s] exit from the grain deal, the collapse of the ruble, and sanctions [on the Russian economy], according to manufacturers from different regions who spoke with Baza,” its Telegram channel posted.

Baza, which has more than one million followers, continued with candor that is uncharacteristic of the largely State-controlled Russian media space.

“Bread and baked goods prices are expected to skyrocket this fall due to a whole host of problems in the industry,” it posted.

“One of the main reasons for the jump in prices, our interlocutors noted, was Russia's withdrawal from the grain deal. After this news, prices for grain and flour crept up both on the world and domestic markets. Therefore, their purchases now cost about 20 per cent more,” Baza said.

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“Sanctions and the collapse of the ruble have also played a role. Because of these two factors, the maintenance of imported equipment has already risen in price by 50 per cent. In addition, producers prefer to buy foreign malt and additives… and their cost has increased by up to 30 per cent,” Baza added.

The follow-on impact of packaging prices due to poor exchange rates, increasingly uncompetitive salaries and staff resignations, and rising logistics and transportation costs, were also pointed out by Baza.

A loaf of bread in Russia cost around RUB 50 in 2022 – or about 50 cents. The average annual salary in Russia is RUB 1.24 million ($14,771) as of June 2023. 

Since the start of Moscow’s full-scale war against Ukraine, the Russian ruble has been declining steadily and reached a 17-month low last week, tumbling past RUB 100 to the US dollar.

The ruble now has less value than a single US cent and has lost nearly 40 percent of its value since the beginning of the year, as Russia’s central bank has steadily hiked interest rates.

The Economist recently said that Russia's "civilian economy will take the pain" even if the government were to "cut back on spending, including on its armed forces, to reduce imports."

Meanwhile, Kyiv City Council today posted an update on its Telegram feed about pensions that it has approved for this year for local residents injured in or impacted by military operations in eastern Ukraine since 2014. 

“This year, the capital financially supported more than 31,000 Kyivans who participated in ATO [anti-terrorist operations] and defenders with disabilities,” City Hall posted on Telegram.

The Kyiv City administration supports eligible local residents with payments of:

·       Hr. 5,000 ($135) for ATO participants;

·       Hr. 30,000 ($812) for ATO participants with Category 1 disabilities, and;

·       Hr. 20,000 ($542) for ATO participants with Category 2 disabilities.

Kyiv also makes payments of Hr. 10,500 hryvnias ($284) to some eligible families of ATO veterans, other military veterans, and members of the “Heavenly Hundred”, a group of peaceful civilian protestors who lost their lives to Russian-backed security forces during the Kyiv-based Maidan revolution in 2014. 

According to Kyiv City, it has thus far paid out Hr. 173 million ($4.7 million) in related payments in total and Hr. 35 million ($950,000) in 2023.

A McDonalds meal in Kyiv can cost around Hr. 300 ($8).