(Bloomberg) — As Russians have turned to panic-buying in the wake of President Vladimir Putin’s invasion of Ukraine, one item remains in plentiful supply — official reassurances that everything is under control.
The government has rushed out near-daily declarations that essential staples remain plentiful in an economy blindsided by war and sweeping international sanctions.
Food? Nothing to worry about, said Agriculture Minister Dmitry Patrushev. There’s an abundance of diapers and sanitary pads, according to the Industry and Trade Ministry. No deficit of fever-reducing drugs either. As for flour, St. Petersburg has enough.
But the word isn’t getting through.
With price pressures already building before the war and global supply chains under strain, Russians are now contending with the new reality of economic isolation by hoarding more than common doomsday shopping favorites.
Bags of sugar from major companies have been out of stock on some websites, replaced by no-name brands selling at three times the price. Sanitary towels, diapers, pet food and coffee capsules are among other goods in high demand, with local items produced by international companies or with imported materials growing especially scarce.
Russia is on track for one of the deepest recessions in its modern history after the ruble crashed and commerce seized up as foreign suppliers of everything from food to cars limit or stop doing business in the country. Although officials acted quickly to head off a bank run and restore some calm in financial markets with capital controls and an emergency interest-rate hike, they have no quick fix for the consumer frenzy.
A March 15-22 survey found that a quarter of Russians stocked up for the future in recent days, largely by buying non-perishables like pasta and household chemicals.
Weekly numbers compiled by Russia’s biggest lender, Sberbank, show consumer spending has been increasing at an annual pace of as much as 25% this month, compared with single-digit increases before the invasion.
“It will take a very long time for the Russian economy to adapt to the situation,” Ksenia Mishankina, a research analyst with Loomis, Sayles & Co., said in an email. “Despite the government’s efforts over the years aimed at weaning Russia off a reliance on imported medicines, the impact has been limited.”
At stake is the ability of Russia’s economy to muddle through as Putin’s military offensive in Ukraine enters its second month. Before the war, the country counted on consumer spending for more than half of all economic activity.
Authorities have set margin limits for essential goods and Russian retailers including X5 Retail Group restricted purchases of “socially important” food items earlier this month following reports of hoarding.
Still, inflation has shown little sign of letting up. Some economists forecast it may reach as high as 25%, a level not seen in Russia since the government’s 1998 debt default.
In a flashback to the Soviet era, the panic buying has emptied shelves, increasingly putting supply under pressure. One online seller said the cost of office paper has risen as much as five times since last month.
Medicine prices are meanwhile rising up to 40%, according to Russia’s health watchdog. Russian doctors see shortages of more than 80 drugs including Nurofen for children, according to a survey.
What Our Economists Say:
“The sanctions shock to supply is pushing up prices much faster than we’d expect from the plunge in the ruble. The initial burst might be driven by outright shortages as well as panic buying, but inflation could accelerate for months as the disruption ripples through supply chains.”
–Scott Johnson.
Other niches of the market are easier to replenish, a reflection of a changing trade landscape as Putin redraws alliances. Russia’s safety watchdog allowed to resume shipments of some fruits from five countries, including China on March 5.
Hygiene products are another case in point, after Always sanitary pads producer Procter & Gamble reduced its business in Russia. It’s hardly making every consumer happy.
“Shop shelves are now full of sanitary napkins from brands I don’t know with names in Chinese characters, sometimes at double the price that Always or Libresse were just weeks ago,” said Larisa, a 46-year-old housewife in Lipetsk south of Moscow.
OTTAWA – Statistics Canada says wholesale sales, excluding petroleum, petroleum products, and other hydrocarbons and excluding oilseed and grain, rose 0.4 per cent to $82.7 billion in July.
The increase came as sales in the miscellaneous subsector gained three per cent to reach $10.5 billion in July, helped by strength in the agriculture supplies industry group, which rose 9.2 per cent.
The food, beverage and tobacco subsector added 1.7 per cent to total $15 billion in July.
The personal and household goods subsector fell 2.5 per cent to $12.1 billion.
In volume terms, overall wholesale sales rose 0.5 per cent in July.
Statistics Canada started including oilseed and grain as well as the petroleum and petroleum products subsector as part of wholesale trade last year, but is excluding the data from monthly analysis until there is enough historical data.
This report by The Canadian Press was first published Sept. 13, 2024.
VICTORIA – British Columbia is forecasting a record budget deficit and a rising debt of almost $129 billion less than two weeks before the start of a provincial election campaign where economic stability and future progress are expected to be major issues.
Finance Minister Katrine Conroy, who has announced her retirement and will not seek re-election in the Oct. 19 vote, said Tuesday her final budget update as minister predicts a deficit of $8.9 billion, up $1.1 billion from a forecast she made earlier this year.
Conroy said she acknowledges “challenges” facing B.C., including three consecutive deficit budgets, but expected improved economic growth where the province will start to “turn a corner.”
The $8.9 billion deficit forecast for 2024-2025 is followed by annual deficit projections of $6.7 billion and $6.1 billion in 2026-2027, Conroy said at a news conference outlining the government’s first quarterly financial update.
Conroy said lower corporate income tax and natural resource revenues and the increased cost of fighting wildfires have had some of the largest impacts on the budget.
“I want to acknowledge the economic uncertainties,” she said. “While global inflation is showing signs of easing and we’ve seen cuts to the Bank of Canada interest rates, we know that the challenges are not over.”
Conroy said wildfire response costs are expected to total $886 million this year, more than $650 million higher than originally forecast.
Corporate income tax revenue is forecast to be $638 million lower as a result of federal government updates and natural resource revenues are down $299 million due to lower prices for natural gas, lumber and electricity, she said.
Debt-servicing costs are also forecast to be $344 million higher due to the larger debt balance, the current interest rate and accelerated borrowing to ensure services and capital projects are maintained through the province’s election period, said Conroy.
B.C.’s economic growth is expected to strengthen over the next three years, but the timing of a return to a balanced budget will fall to another minister, said Conroy, who was addressing what likely would be her last news conference as Minister of Finance.
The election is expected to be called on Sept. 21, with the vote set for Oct. 19.
“While we are a strong province, people are facing challenges,” she said. “We have never shied away from taking those challenges head on, because we want to keep British Columbians secure and help them build good lives now and for the long term. With the investments we’re making and the actions we’re taking to support people and build a stronger economy, we’ve started to turn a corner.”
Premier David Eby said before the fiscal forecast was released Tuesday that the New Democrat government remains committed to providing services and supports for people in British Columbia and cuts are not on his agenda.
Eby said people have been hurt by high interest costs and the province is facing budget pressures connected to low resource prices, high wildfire costs and struggling global economies.
The premier said that now is not the time to reduce supports and services for people.
Last month’s year-end report for the 2023-2024 budget saw the province post a budget deficit of $5.035 billion, down from the previous forecast of $5.9 billion.
Eby said he expects government financial priorities to become a major issue during the upcoming election, with the NDP pledging to continue to fund services and the B.C. Conservatives looking to make cuts.
This report by The Canadian Press was first published Sept. 10, 2024.
Note to readers: This is a corrected story. A previous version said the debt would be going up to more than $129 billion. In fact, it will be almost $129 billion.
NANAIMO, B.C. – Former Bank of Canada governor Mark Carney says he’ll be advising the Liberal party to flip some the challenges posed by an increasingly divided and dangerous world into an economic opportunity for Canada.
But he won’t say what his specific advice will be on economic issues that are politically divisive in Canada, like the carbon tax.
He presented his vision for the Liberals’ economic policy at the party’s caucus retreat in Nanaimo, B.C. today, after he agreed to help the party prepare for the next election as chair of a Liberal task force on economic growth.
Carney has been touted as a possible leadership contender to replace Justin Trudeau, who has said he has tried to coax Carney into politics for years.
Carney says if the prime minister asks him to do something he will do it to the best of his ability, but won’t elaborate on whether the new adviser role could lead to him adding his name to a ballot in the next election.
Finance Minister Chrystia Freeland says she has been taking advice from Carney for years, and that his new position won’t infringe on her role.
This report by The Canadian Press was first published Sept. 10, 2024.
