Russia’s economy is balanced in such a way that during the war it supplies weapons and butter, claims Vladimir Putin.

But the price of butter in Russia is soaring as rising inflation distorts parts of the economy.

The price of butter has risen 25.7% since December, according to the state statistics office.

Reuters journalists found that the price of a package of high-quality butter of “Brest-Litovsk” in Moscow has increased by 34% since the beginning of the year to 239.96 rubles (2.3 euros).

“THE Armageddon with butter escalates, we wouldn’t be surprised if butter repeats last year’s situation with eggs,” economists warned on Russia’s popular Telegram channel MMI, referring to an earlier rise in egg prices that worried consumers.

The sharp rise in price has caused wave of butter thefts in some supermarkets, according to Russian media, and some retailers have started putting individual pieces of butter in plastic containers to prevent shoplifting.

The authorities, who have made every effort to ensure that the war in Ukraine does not affect people’s daily lives, are closely monitoring the development of product prices.

Dmitry Patrushev, deputy prime minister in charge of agriculture, said on October 23 that the government would monitor butter prices. He met with major dairy producers and retailers and said imports are picking up.

Milk prices have also soared, as have wages, interest rates, fuel and transport. The butter imports from Belarus are not enough, so Russia expects a large shipment from Turkey, even from Iran and India, Russian media reported.

Defense spending is increasing

Putin has made much of the resilience of Russia’s wartime economy and cited the link between “weapons” and “butter” after appointing economist Andrei Belusov to head the defense ministry earlier this year.

OR $2 trillion economy has so far exceeded expectations: shortly after Putin sent troops into Ukraine in 2022, Western economists predicted its imminent collapse.

Instead, despite the heaviest Western sanctions ever imposed on a major country, it grew faster than the United States and almost all major European countries.

Prices, however, are now rising – as are interest rates, which the central bank raised by 200 basis points to 21% on October 25, the highest level since Putin’s first term in 2003. The central bank expects inflation 8.0-8.5% this year.

As it wages a major land war against Western-backed Ukraine, Russia is spending more on defense than at any time since the Cold War — and that’s pushing up prices, even as the International Monetary Fund forecasts growth of 3 .6% this year.

Jim O’Neill, the former Goldman Sachs chief economist who coined the term “BRICs” in 2001, has questioned how sustainable the situation is if things continue.

“It’s all due to massive Russian defense spending“, O’Neill told Reuters of the overall macroeconomic picture. “So I think the medium to long term outlook is pretty bleak».