Vodka prices in Russia set to soar to combat Ukraine war inflation

The Telegraph: The Kremlin is being urged to increase the price of vodka in Russia to match Ukraine war-driven inflation.

From next year, vodka producers across the country want to see prices increase by 17 per cent to cope with a rise in tax, import costs and logistics expenses, as well as a fall in the value of the rouble.

The increase will only match the impact of inflation that has escalated since the start of the war.

Veniamin Grabar, the president of the Lagoda vodka and spirits producer, told the RBK news agency: “The government is adjusting the market for inflation, as well as changed cost prices and other components that form the price of vodka.”

After the price rise, half a litre of vodka in Russia will cost 349 roubles (£2.37), up from 299 roubles in June.

Vodka is a staple of Russian culture and heritage. Much like beer production in Britain, every town in Russia has a local producer. The average consumption of vodka per person in Russia is around 17.3 shots per month – the largest in the world.

Kremlin is facing pressure to raise the price of Vodka to keep up with the snowballing rate of inflation - ANDREY RUDAKOV/BLOOMBERG

Maxim Chernogovsky, an analyst who tracks Russia’s illegal alcohol market, said the price rise would increase demand for bootlegged vodka, known as “samogon”.

“People, especially those with low incomes, are starting to look for cheaper substitutes and are switching to illegal alcohol and surrogates – samogon, ethyl alcohol-based medicines, and other dangerous alcohol-containing products,” he told the Komsomolskaya Pravda newspaper.

Official inflation in Russia is registered at around nine per cent, but analysts have said Vladimir Putin’s shift to push the Russian economy onto a war footing by pouring money into arms production and military recruitment has propelled real inflation to three or four times that figure.

The Central Bank raised its key interest rate to 19 per cent in September, and is already talking about raising it again to levels last hit in the 1990s when the Russian economy was coping with the fallout from the collapse of the Soviet Union.