Russian prices will be untied from world prices: monopolists will be limited in their desire to rewrite price tags

The State Duma in the first reading adopted a bill on decoupling prices in Russia from global prices. The document caused controversy, including in parliament itself. What kind of “iron curtain” can be used to isolate oneself from the outside world with its dominant dollar and integration processes, if Russia is part, and a significant one, of the global market?

The authors of the bill believe that it will be possible to set optimal prices for some goods produced in Russia. And from them they can dance, like they dance from a stove – slightly increasing or decreasing, depending on the balance of supply and demand. “Domestic prices for goods are often based on indicators of foreign markets and do not take into account the economic situation within Russia,” write the authors of the bill.

The law, according to its creators, will allow the antimonopoly service not to take into account world prices when determining whether a product is overvalued or undervalued in Russia. Which in turn will make it possible to set prices taking into account the interests of Russian consumers.

In general, the global market is to blame for everything. Managers willingly rewrite prices in supermarkets after they have become familiar with the price index on world commodity exchanges – in New York, London or Hong Kong. If a kilo of rice there has jumped, say, by 10%, then it’s time to bring ours up to the world level…

The authors of the bill are confident that such distancing from foreign markets will, if not reduce prices within the country, then at least sharply slow them down.

Some experts, however, are of the opposite opinion – in a global economy, such an initiative, on the contrary, will increase prices in the domestic market. After all, almost all countries in the world have inflation, but no one has died from it. The main thing is not the rise in prices, but the growth in income of the population.

For our fellow citizens, the bill is also not entirely clear. We have been taught that the most reliable indicator is not world prices on stock exchanges, but the dollar exchange rate. If it grows against the ruble, then prices in stores also rise. This is logical, this is a market, and Russia is part of the world economy…

“Our internal prices have never been tied to external ones,” says Candidate of Economic Sciences, financial analyst Mikhail Belyaev. — Except for those goods that we import in their pure form from abroad. For example, bananas, pineapples or electronics. They are placed on retail shelves in stores with prices calculated in terms of the dollar exchange rate or taking into account the demand for the product. So they are tied to the foreign market. This is a purely imported story; it cannot be any other way.

— But the law deals with goods produced in Russia…

— If the product is not associated with imported products or with a significant part of imported components in the final product, then it has nothing to do with world prices. Such a connection with the “outside world” exists only in the heads of domestic monopolists, who, when raising prices for their goods, refer to world indicators. This has no economic justification.

– What do you have in mind?

— I recently read the notes of a Russian tourist who had just returned from France. She said that she grabbed her head when she saw the prices of chicken eggs in Paris. Many times more expensive than in Russia. This is a signal to our monopolists: isn’t it time to raise egg prices in Russia too? They often work according to this scheme.

I would say this: the bill decoupling prices from global prices is an elegant formulation of the fact that our monopolies, which increase the cost of goods, are prohibited from citing foreign prices to justify their own arbitrariness. What does the exchange rate of the ruble have to do with your products if they are produced using Russian resources?

— If the bill is adopted, prices for some goods of Russian origin may decrease? For example, products where we have made great progress in import substitution?

— Our monopolized market is designed in such a way that prices move only forward. Any Russian has long understood this. But if the situation is properly monitored by the Federal Antimonopoly Service, then for some items prices will first stabilize, and then, perhaps, their growth will slow down. Monopolists will have one less “good reason” for raising prices.

Published in the newspaper “Moskovsky Komsomolets” No. 29229 dated March 5, 2024

Newspaper headline:
Our prices will go their own way