Shampoos, toothpaste, dishwashing are 35% more expensive: economists sorted out the rise in price

35% protective duties on a wide range of goods from “unfriendly” countries come into force in Russia. First of all, we are talking about household chemicals and personal hygiene products, for which, as the Ministry of Industry and Trade explains, there are domestic analogues that are not inferior in quality to foreign ones. But the question arises: what kind of analogues are they, are they capable of replacing expensive imported products in terms of their consumer properties, and at what prices will they be sold?

Prime Minister Mikhail Mishustin signed a decree on new import customs rates. Earlier, Russian manufacturers applied to the Ministry of Industry and Trade with a similar initiative. They said that such a measure would be a mirror response to Western brands that curtailed their business in the Russian Federation, but did not stop the supply of finished products.

In particular, it was proposed to impose an additional duty on the products of Gillette, Old Spice, Fairy, Oriflame, Colgate, Nivea. Products of these brands – shampoos, toothpastes, shaving products, deodorants, detergents and cleaners – are manufactured mainly in the USA, Canada, Great Britain, Australia, New Zealand. That is, in the most “unfriendly” countries.

As noted in the National Council for Perfumery, Cosmetics and Household Chemicals, in Russia, foreign brands had leased facilities where they produced their products from imported raw materials. But in the spring of 2022, all logistics collapsed, and it became more profitable for them to import ready-made goods into the Russian Federation.

The Ministry of Industry and Trade, in turn, clarifies that there are no plans to increase duties on cosmetics and perfumery from “unfriendly” countries, the demand for which Russian manufacturers cannot yet satisfy. However, this heap of departmental explanations does not contain an answer to the question of which positions we “imported” and which did not.

“Household chemicals, personal hygiene products are clearly not the sector of the consumer market where protective duties should have been introduced,” said Igor Nikolaev, chief researcher at the Institute of Economics of the Russian Academy of Sciences. – Everything related to the health, well-being, and everyday comfort of people should remain outside the scope of trade wars.

It is clear that the goods on the government list will rise in retail prices in proportion to the new tariff. For example, in the period from January to September 2022, sales of almost all types of soap in Russia decreased due to a 3.5% increase in prices for toiletries, which is quite significant. And now the population will save even more on them, although, of course, they will not stop washing.”

Yes, there are domestic analogues of these imported products. But, firstly, not all, and secondly, in terms of their consumer properties, they are for the most part inferior to it. Why do our housewives prefer Western detergents for decades if, as the Ministry of Industry and Trade assures, the quality and range are comparable? The story is almost the same as with the import substitution of products of the European, American, Japanese automobile industry with domestic Lads, Nikolaev summarizes.

“In general, retail prices for these types of goods are guaranteed to soar by 35-40%, and somewhere, in conditions of especially expensive lease of retail space, even more,” says Nikita Maslennikov, a leading expert at the Center for Political Technologies. – We are talking about things that are absolutely necessary in everyday life, which make up the daily standard of consumption. Domestic analogues, as a rule, are available, but it’s all about the nuances.

Say, toothpaste can be used, but does it have an additional healing effect? In addition, the products of Russian manufacturers are often more expensive than imported ones, toothpaste sometimes costs about 300 rubles. Or, for example, what would you substitute for Calgon, a water softener, so as not to damage the washing machine?

There is also a high probability that, following imported products, Russian products will also rise in price, since for manufacturers in the Russian Federation this will become a kind of signal for rising prices, a benchmark. In addition, Maslennikov notes, out of the blue, an additional pro-inflationary factor is being created. So the decision is not too calculated, no matter how you look at it. Analogues will be determined by the state according to the basic operational properties: after brushing the teeth, the enamel does not peel off, that’s nice. Washing powder does not change the color of clothes – great.

However, not all experts are so skeptical. “These duties are designed to increase the presence of domestic products in our stores,” says Artem Deev, head of the analytical department at Amarkets. – We are talking about healthy state protectionism, due to which domestic manufacturers of household chemicals and cosmetics will be able to increase turnover and profit.

As for imported branded goods, their price will surely increase, and the assortment will be reduced. But the fact is that shaving foam from a well-known Western company and the same product of a domestic brand are technically not much different. All this is done everywhere according to standard technologies, from standard raw materials (paraffins, oils, additives – fragrances and dyes) – our manufacturers either buy them abroad or receive them from domestic factories.