Food Retail – authorities to monitor prices in 40 categories
Vedomosti reports that the government will monitor prices in 40 categories and 13 socially important food products in retail and wholesale. The list includes a basic assortment of certain cereals, tea, water, sugar, salt, sunflower oil, frozen fish, canned food, some kinds of meat, meat products and dairy. The decision has been taken in order to avoid unjustified increases in prices due to the recently imposed food import bans. The authorities will investigate the reasons behind any price increases and apply administrative penalties if required. Prices will be benchmarked against the historical CPI for a particular category and season.
We expected such administrative pressure on retailers, and it is in our view still the major risk to retailers from the food import bans. The list of the announced categories looks extensive and accounts for a big share of retailers’ revenue (subject to particular format). Although this might negatively affect margins, the scope of the risk would depend on the implementation and execution of monitoring and potential regulation.
Maria Kolbina, Ivan Kushch, Nikolay Kovalev
VTB Capital analyst
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