Because of the ruble in Russia is 10% more expensive bread

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On the market there were conversations that closer to mid-late autumn bread can rise. This is due to the exchange rate shocks that occurred in July and August, as well as reducing the forecasts for the harvest this year. We are talking about approximately 10%-s ‘ increase in the price of bread, at least say so in the margins of the market.
This is a normal market standards value, but for the consumer it can be noticeable. Appreciate flour because of rising prices for wheat of the third grade (not the best raw material for bread production, but in Russia, the main issue comes from). Wheat, in turn, becomes more expensive due to the weakening of the ruble and the deterioration in monetary conditions, as well as problems with the new harvest.
On the one hand, production of bread for the plant in vertically integrated holdings (now the majority) only marginally profitable or even unprofitable. The daily demand for bread can be calculated only approximately: surplus production the sellers are usually looking back, and nobody is particularly worried about that the manufacturer going to do with it and how to deal with their losses.
The return can be up to 15%. Loss block usually other production areas, as well as “optimization” of expenditure in the production of bread (in components and quality). On the other hand, bread – socially significant product, and to reach the production decline is not so simple. In addition, the price of bread is controlled by the state, but it is those breads that are not actively increasing in price. The most popular offers of bread cost as much as considered reasonable manufacturer, and then and the seller.
What will the government do, when they see that bread prices will start to creep up? Most likely, the manufacturer subsidizes the amount of the loss in order to “fix” the selling price tags close to their previous values. Such was the case when the grain harvest was not the best. In such manual regulation is not surprising, then other mechanisms do not exist since this market is still very far from the conditions of competitiveness. Everything is cheap and malosedobnaya, or a very expensive and delicious. It’s exactly the same as the structure of the Russian society.
Anna Bodrova,
Senior analyst,