Inflation Furthers Gap in Russia's Rich and Poor

Inflation is taking a toll on Russians. In the past year, prices of some goods have risen by more than 50 percent. The government has taken a hands-off monetary policy, imposing price controls rather than adjusting interest rates. As inflation continues, it casts a spotlight on the growing gap between Russia's rich and poor.

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ANDREA SEABROOK, host:

Over the past six weeks as Americans have attended primaries and caucuses on the road the choosing a new president, voters have consistently told exit pollsters that the economy is at the top of their concerns.

That's not the case in Russia, where a presidential election is less than a month away. Prospective voters aren't talking about skyrocketing prices or how Moscow is becoming one of the world's most expensive cities. NPR's Gregory Feifer reports that a sense of economic malaise may be creeping over the Russian electorate.

(Soundbite of cash register)

GREGORY FEIFER: Cash registers are busy here in a central Moscow supermarket, but many customers are buying only a few items. Pensioner Gallina Yvanna's(ph) shopping basket contains only bread and milk.

Ms. GALLINA YVANNA: (Russian spoken)

FEIFER: I can't afford anything else, she says; it's too expensive. Except sometimes for coffee; that I insist on having. But I can't buy meat. Rising prices have really affected the way I live, she says.

Prices for almost every food product rose last year, some by more than 50 percent. Overall, inflation reached about 12 percent. It's part of a global trend and partly reflects rising costs for energy and transportation. But Illena Sharipava(ph) of the investment bank Renaissance Capital says the government won't address the economy's fundamental problems.

Ms. ILLENA SHARIPAVA (Renaissance Capital): (Through translator) Other countries take tough measures to fight inflation, such as raising interest rates. Russian officials instead prefer to just wait and see what will happen.

FEIFER: What the government has been willing to do is engage in what many call window dressing, imposing Soviet-style price controls meant to generate support for the government ahead of the presidential election next month. It's ordered stores in the capital to freeze prices for some staple goods. But Slatta Prolishuk(ph) of the discount supermarket chain Dixie says that will actually hurt consumers in the long run.

Ms. SLATTA PROLISHUK: (Through translator) Ordering us to freeze our prices is not a way to fight inflation. It's not the way a market economy should work. It's a short-sighted, short-term measure that will probably lead to even higher inflation later.

FEIFER: But Prolishuk says even though her Dixie chain targets lower-income Russians, inflation isn't hurting business. She says rising prices are simply putting all the burden on consumers by forcing them to pay more for essentials they have to buy.

But not everyone has been hit hard. Global high prices for oil and natural gas, Russia's main exports, are helping create a growing class of wealthy and middle-class Russians who are taking part in a massive consumer boom. And some believe shops are raising prices because there are plenty of willing customers.

Inside an enclosed street market, butchers are one stall chop meat with large cleavers. Although shoppers here too complain their family budgets are being stretched to the limit, inflation doesn't appear to be a political issue.

Outside the market, accountant Yvgenev Smirnova(ph) says she wasn't able to afford a vacation last year but that she's still voting for President Vladimir Putin's chosen successor, Dmitry Medvedev next month.

Ms. YVGENEV SMIRNOVA: (Through translator) There's just no alternative. Medvedev is the only candidate who will be able to make our country more powerful and respected in the world.

FEIFER: The Kremlin's control of the national media has helped stop the opposition from airing its criticism of government policies. But political experts say there's another major reason Medvedev is expected to win a landslide next month: voter apathy. They say Russians simply don't link their daily struggles to the actions of a government they don't expect to help them.

Gregory Feifer, NPR News, Moscow.

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