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. Last Updated: 07/27/2016

Food Industry Agrees on Price Freeze

Itar-TassThe price-fixing pact is being seen as a way to stave off public discontent.
The food industry agreed on Wednesday to freeze prices on a range of foodstuffs as the government seeks to combat a surge in the cost of basic staples, an Agriculture Ministry spokeswoman said.

The deal, thrashed out at meetings at the Agriculture Ministry last week, will see producers and retailers agree to fix prices on a number of socially significant products, including milk, vegetable oil, eggs and bread, RIA-Novosti reported.

Companies involved in the pact include retail chains Auchan, Lenta, Metro, Mosmart, Pyatyorochka and Perekryostok, as well as dairy firms Unimilk and Wimm-Bill-Dann.

Industry and ministry representatives confirmed that the agreement would be backdated to Oct. 15 and run until Jan. 31, Wimm-Bill-Dann chief executive David Yakobashvili said, Interfax reported.

The pact is being seen as a crucial way to stave off public discontent over sharp rises in food prices over the past few months and to ease fears that overall inflation could reach double digits this year.

Prices on vegetable oil rose 13.5 percent and the price of pasteurized milk by 9.4 percent in September, according to figures from the State Statistics Service.

Industry and government representatives have been keen to stress that the price freeze was put forward by the food industry, but commentators have suggested that the move came under political pressure ahead of State Duma elections in December.

In recent weeks, government officials, led by President Vladimir Putin and Prime Minister Viktor Zubkov, have sought to shift the blame for the sharp prices rises onto retailers and producers.

The agreement cleared one potential bureaucratic hurdle when the Federal Anti-Monopoly Service gave its approval to the proposed price freeze in a statement released Wednesday.

"The Federal Anti-Monopoly Service considers the agreement permissible, as it is only temporary and in the interests of consumers," the statement said.

The price freeze agreement came despite apparent opposition to the move from some senior government quarters.

In an interview published on RIA-Novosti's web site Wednesday, Finance Minister Alexei Kudrin spoke out against price-fixing measures.

"We should not freeze prices. It is a market and on the market, prices cannot be frozen. That would be a mistake," Kudrin told the agency.

Commenting on negotiations between the government and food retailers and producers, Kudrin said the measure would only be very temporary.

"We are only doing this to avoid further price rises. To avoid a move toward a price peak, a price shock," he said.

In a further sign that authorities are actively cracking down on retailers, the Federal Anti-Monopoly Service announced Tuesday that it had opened up to 40 investigations against traders accused of speculating on food price rises, RIA-Novosti reported.

"The investigations primarily concern the abuse of monopolistic positions in the food goods sector," said Andrei Tsarikovsky, deputy head of the service.

The service has checked markets selling milk, butter, meat and cheese in the Krasnoyarsk, Tomsk, Perm, Penza, Rostov and Ivanov regions, Tsarikovsky said.