By Murad Rakhimov | 2024-12-05

TASHKENT -- Prices are soaring in Russia as the economy groans under the burden of President Vladimir Putin's invasion of Ukraine.

Borrowing has become costly, with lending interest rates of up to 32% per year. In October, the Russian Central Bank raised its benchmark annual lending rate from 19 to 21%, its highest rate since 2003.

At the same time, prices keep rising and devouring the public's savings.

Meanwhile, troops who go to war in Ukraine are promised wages and bonuses amounting to millions of rubles over a year, if they live long enough to collect.

'Butter thieves'

In the prison slang of Soviet times, a common term for convicted embezzlers of "socialist property" and for dishonest managers in wholesale or retail sales was "butter thieves."

In modern Russia, ordinary citizens have unexpectedly become literal "butter thieves" and increasingly appear in the latest crime reports. Shoplifting of butter has become more frequent in small shops and large supermarkets.

Butter is being stolen not only by ordinary shoppers but also by hardened criminals, according to the Interior Ministry (MVD).

In November, the Tula provincial court fined a local resident who stole 61 packs of butter from a store, creating a record of sorts. Butter is mentioned at least nine times in posts on the Tula provincial court system's Telegram channel in October, according to the Tula News Service.

On October 29, two men were detained in Moscow for stealing 25 packs of butter from a supermarket. One brandished a knife at a store employee who tried to stop them.

Similar incidents are occurring across a broad area: in Moscow, St. Petersburg, Rostov, Samara and other regions. Economic factors are the primary reason for the surge in butter thefts.

Butter prices are up by 30% since the beginning of 2024, and the price already exceeds 1,000 RUB (€9) per kg in some provinces, according to Rosstat.

In addition to butter, shoplifters are stealing sausage, chocolate and other popular foods.

Observers attribute the shoplifting to the deteriorating economy, rising inflation and falling living standards in wartime Russia.

The war economy

Russian Central Bank Governor Elvira Nabiullina, when she announced the rise in the lending rate to 21% in October -- the third increase in a row and the highest since the end of the Soviet Union -- implicitly blamed the invasion of Ukraine for stoking inflation, The New York Times reported.

The Kremlin is overheating the economy with war spending, incentivizing defense contractors to borrow at any rate (making interest rate increases ineffectual in curbing inflation) and creating a labor shortage by sending so many men to fight and die in Ukraine, she said.

The shortage fuels inflation even more by forcing employers to raise wages in their competition for workers.

Increasing shoplifting from grocery stores reflects consumers' inability to keep up with inflation, said Alisher Ilkhamov, director of Central Asia Due Diligence in London.

"The Central Bank's key [annual lending] rate has already been set at 21% and is expected to rise further," Ilkhamov told Kontur. "The dollar exchange rate has passed the 100-RUB mark ... Butter prices are up because milk prices are up. They are expected to rise even higher by the end of the year."

Inflation will go in only one direction, upward, concurred Meruert Makhmudova, director of the Public Policy Research Center in Almaty.

Trying to contain the inflation affecting butter, Russia has canceled duties on its imports from "friendly" countries, including those that do not belong to the pro-Moscow Eurasian Economic Union.

Soon butter from India and Iran will appear in Russian stores.

"Shortages of other foods as well will occur periodically, which is explained by the imbalance in the economy -- increased military production and a simultaneous increase in consumption among segments of the population that have now begun to receive mobilization payments or death benefits," Makhmudova told Kontur.

Phony poverty statistics

Suppressing evidence to the contrary, the Kremlin keeps portraying a prosperous Russia.

In the second quarter of 2024, only 8.5% of Russians lived below the poverty line, Rosstat reported in September. It put the poverty line at 15,354 RUB (€138.80) per month.

Meanwhile, the average monthly salary in Russia in the first half of 2024 was 61,500 RUB (€556), Gazeta.ru reported in July, quoting Roman Gubanov, an executive at the Avito.ru classified ad website.

The Kremlin's statistics cannot be trusted, a Russian historian and sociologist told Kontur on condition of anonymity.

They reflect Soviet-era manipulation of statistics to meet political needs, he said.

The real income needed for survival "is much higher [than the official poverty line]," he said. "Prices have risen dramatically over the past year. And if the Central Bank's rate is already 21%, then inflation is much higher than 21%."

Varvara Klimenko, a Barnaul resident, retired last year and now receives the equivalent of $130 from the state each month.

While Moscow offers contract troops high salaries, "we retirees can barely make ends meet," she told Kontur. "I'm ... starting to forget the taste of sausage and [other] meat."

"Is it really true that the lives of retirees are not a priority, and that contract soldiers in the SMO ['special military operation' in Ukraine] are the most important people in the country?" she asked.