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Russian Food Retail – Ministry of Agriculture proposes initiatives to cap price inflation at the regional level

 
25.08.2014
According to Vedomosti, the Ministry of Agriculture has proposed initiatives to cap price growth for food products. The programme involves the agreement between regional state authorities, producers, and retailers to fix the mark-ups on selected products and, as a result, the final shelf price. The final list of goods has not yet been specified.
In our view, the initiative primarily targets local regional chains that are relatively harder to monitor than large federal retailers. Although the final list has not been disclosed, we expect the scope of the programme to largely mimic the existing list of 40 food goods that are already closely monitored by the state. Similar programmes implemented in 2007 and 2010 proved to be inefficient, with inflation for the selected products higher than those on the consolidated level. Thus, we see limited market reaction to the update until the final list of goods as well as the implementation measures are introduced by the state.
Maria Kolbina, Ivan Kushch, Nikolay Kovalev
VTB Capital analyst

Tags:
retail

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