Friday, May 01, 2015

Russia’s Beloved Borscht Reveals Reality of Inflation

Russia’s Beloved Borscht Reveals Reality of Inflation

Retired Siberian journalist tracks ingredients to document the country’s soaring food prices

By Paul Sonne in the Wall Street Journal

MOSCOW—Every other month, retired teacher Natalya Atuchina cooks up a special pot of borscht in her home city of Omsk. A year ago, she bought the ingredients at local markets for 165 rubles ($3.20). In April, they cost nearly 247 rubles.
Ms. Atuchina’s soup is the benchmark for the “Borscht Index,” a metric her husband Sergei Komarovskikh devised a little over a year ago to track food costs in their Siberian city. Since then, the borscht’s price has risen 49.5%, evidence of the real-life sting of inflation in Russia.
“Borscht is a very objective indicator,” says Mr. Komarovskikh, a 66-year-old retired journalist. In a recent report for local news agency OmskInform, he wrote: “The borscht can’t lie.”
Russia had its most severe year-over-year monthly inflation in 13 years in March, the result of a plunge in crude oil prices, a devalued ruble and the Kremlin’s ban on an array of Western food imports imposed in retaliation for sanctions over Ukraine. Overall, inflation climbed to 16.9% compared with a year earlier, according to the state statistics service, pinching the wallets of Russians as incomes failed to keep pace.
Most dramatic have been price hikes on fresh produce, including ingredients in Russia’s beloved borscht, a savory magenta-red mix of beets, potatoes, and a host of other ingredients, whose prices have swerved widely over the past year. Food inflation rose 23% in March from the previous year, with 38% inflation on fruits and vegetables.
So far, however, there is little indication Russians are holding the Kremlin responsible for their checkout-counter woes. Authorities have presented the import ban as a patriotic measure to defend Russia and boost domestic agriculture. Price hikes on embargoed foods have been masked by a broad wave of inflation on nearly all products—banned or not.
“The cost of everything has grown sharply as a result of the ruble’s devaluation,” says Yulia Baskakova, a sociopolitical researcher at state pollster VTsIOM. For everyday Russians, the exact role the sanctions and ban “are playing is difficult to distinguish even for an educated person.”
The Kremlin ban added 2.5 percentage points to Russia’s overall inflation in February, according to the Ministry of Economic Development. The effect on individual products has varied, however.
The price of Russian-made chocolate bars, for instance, has shot up 38% in the past year, affected by far higher costs for imported ingredients including popular additives such as dried fruits and nuts that came under the embargo, according to Russia’s Center for Confectionary Market Research.
Other goods, such as milk, have seen more muted increases.
Even basic foods made or grown in Russia have witnessed price jumps. The cost of imported seeds, chemicals, fertilizer and equipment rose for farmers as the ruble sank. Producers began raising their prices upon seeing inflation on other products, and in some cases adjusted prices closer to what their goods would fetch abroad.
In Moscow, economists predict the surge has neared a peak and will soon decelerate, barring radical fluctuations in the ruble or price of oil. Weekly inflation slowed to its lowest rate in half a year earlier in April. Food prices, however, are likely to remain high.
During his annual call-in show on April 16, President Vladimir Putin acknowledged the Kremlin embargo had driven up food prices but said inflation had begun slowing and the ruble was strengthening. “It has a negative impact from the point of view of food inflation, that’s true,” Mr. Putin said. “Here one has to be patient, because the growth of domestic agriculture is inevitable.”
Food-price inflation has hit Russia before. In 1962, a price hike on food staples played a part in sparking a riot in Novocherkassk, leading to a crackdown by Soviet troops that left 26 people dead.
At other times, Russians have endured shortages and even hyperinflation with little turmoil. In the early 1990s, when Russia lifted Soviet-era price controls, few mass protests resulted. In 1998, when a dramatic devaluation in the ruble led to soaring food prices, public disorder proved minimal.
Since Mr. Putin came to power in 1999, frenzied growth and rising commodity prices have sometimes spurred inflation—but that came in tandem with real income growth. Russians cited rising prices as their biggest worry in a February Levada Center poll.
“The question is whether people are willing to continue to ignore it or whether there will be a buildup of discontent, a gradual accumulation, which could come out by autumn,” says Russian political analyst Mikhail Vinogradov.
Meanwhile, authorities are moving to tamp down inflation. The Prosecutor General said in mid-March in response to a question from a member of parliament that it had opened about 1,500 criminal cases tied to improper increases of food prices in 2015.
The Federal Antimonopoly Service backed an initiative by Russia’s biggest food retailers to cap prices on “socially significant” products for two months. The limits started in March and included some borscht ingredients such as potatoes. Starting in early February, Russian authorities also capped exports of grain.
In Omsk, Ms. Atuchina, 60, says she makes her borscht from a recipe handed down by her grandmother. The price increases have affected her more than before because she and her husband now rely on state pensions, she says.
Still, the couple vows to continue cooking the soup. It isn’t only to track inflation, Mr. Komarovskikh notes: “Borscht is delicious.”

How to Make Natalya Atuchina’s Borscht
Ms. Atuchina learned from her grandmother how to make her borscht. She has no written recipe but agreed to describe her general steps for The Wall Street Journal. (A tip: Ms. Atuchina says it tastes best the next day, after time in the refrigerator.)
Makes 3 liters (3 quarts)
1 kilogram (2.2 pounds) beef
3 potatoes, diced
1/4 head cabbage, shredded
2 beets, sliced
Oil or butter for frying*
1 carrot, chopped
1 onion, chopped
1 small can tomato paste (70 grams or around 2.5 ounces)
Salt and pepper, to taste
Herbs, such as dill and parsley
Sour cream*
1. Boil the meat for an hour in a pot of water.
2. Remove the meat and put the diced potatoes in the broth.
3. Once the broth is boiling again, add the shredded cabbage.
4. Meanwhile, slice the beets into strips and saute them lightly in a pan.
5. Add the carrot to the beets and continue to saute a few minutes.
6. Add the onion to the pan and saute until transparent.
7. Add the tomato paste to the pan and saute 3-4 minutes, stirring.
8. Put contents of pan back into the broth, add salt and pepper and cook for five minutes.
9. Cut up meat and add as desired to the soup.
10. Add finely chopped herbs such as dill and parsley on serving, as well as sour cream.

*Not included in “Borscht Index” of inflation.

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