Recent reports from EastFruit highlight a series of cancellations for previously agreed shipments of fruits and vegetables to Russia from Turkey, Egypt, and Iran. These cancellations are attributed to the sharp devaluation of the Russian ruble and emerging currency risks associated with trade with Russia. The country is currently grappling with galloping weekly inflation, with a notable increase in consumer prices by 0.37% in the latest week, pushing the year-to-date inflation rate to 7.4%. Despite the Central Bank's efforts to control inflation by increasing the refinancing rate, these measures have had little impact.
The inflation spike has severely affected prices for vegetables, potatoes, and fruits. Since last December, potato prices have surged by 350%, while the price of vegetables like cucumbers has almost tripled over the year. The Russian ruble's 20% devaluation against the dollar since early August has also made imported goods, including fruits, more expensive. This situation is exacerbated by the onset of the holiday season and the beginning of the mass importation season for greenhouse vegetables, which are traditionally more costly than local produce.
The currency exchange risks and the ruble's sharp devaluation have led to cancellations of fruit export contracts from Egypt, Turkey, and Iran, with exporters from these countries demanding price renegotiations. This inflationary pressure impacts consumers and businesses alike, making basic food items increasingly unaffordable and driving up costs for raw materials, logistics, and wages. The Central Bank's interest rate hike to 21% has yet to show effectiveness in curbing inflation. The situation is further complicated by the government's significant spending on government contracts in December, adding pressure on the ruble
The economic challenges faced by Russia, highlighted by the cancellation of fruit contracts and the need for price renegotiations, underscore the broader impacts of the country's inflationary spiral and currency devaluation. The situation poses a severe threat to the Russian economy and its currency, marking a critical period since the dissolution of the Soviet Union.
Source: East Fruit