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All news / Decoupling of domestic prices in Russia from world prices

  • 01 Mar 2024, 10:39

The State Duma of the Russian Federation adopted in the first reading a bill aimed at decoupling domestic prices from global indicators. This initiative is designed to establish the independence of Russian prices and prevent their automatic increase following rising prices on global trading markets.

The essence of the bill

Currently, the cost of many goods and services in Russia directly depends on indicators emerging in foreign markets. This means that even a slight increase in world prices can lead to an increase in costs within the country.

The bill proposes to exclude from the definition of a monopolistically high or monopolistically low price of a product its comparison with prices on foreign markets. Thus, changes in value on global commodity exchanges will not be taken into account when assessing antitrust legislation.

Experts' reaction

The bill was criticized by some deputies, who expressed concern about the possibility of it being used to inflate prices by domestic producers. Experts confirm the existence of such risks, especially given the low level of competition in the domestic market.

However, the Federal Antimonopoly Service (FAS) supported the bill, emphasizing that it is in line with plans for the development of exchange trading in goods. According to the department, excluding world prices from calculations will allow the FAS to focus primarily on the balance of supply and demand within the country, and also take into account the purchasing power of the population.

Powers of the FAS

Despite the adoption of the bill, the FAS will retain the same tools that allow it to compare domestic prices with world prices. However, the department will be obliged to take into account exclusively exchange and over-the-counter indicators that have developed on Russian exchanges.

Author's comments

One of the authors of the amendments, Deputy Chairman of the Federation Council Committee on Rules and Organization of Parliamentary Activities Alexander Savin, noted that the bill also provides for the possibility of sending FAS warnings to business entities about the inadmissibility of actions that could lead to a violation of antimonopoly legislation.

Unlinking prices from world indicators will create a more independent and stable economic system in Russia, as well as protect Russian consumers from unjustified price increases.