Fixed prices for "life essential goods" post soviet

by Loham

I believe I read in a russian history book in university that after the fall of the soviet union, 3 goods were regarded as "life essential" and kept at a fixed price. These goods were cabbage, potatoes and vodka.

Thought it would be a fun trivia for a Christmas quiz at work, but I'm having a hard time verifying what I remember online. Only found statements by Yeltsin that some commodities would not be subject at once to a free market.

Would appreciate it if someone knew if this was correct or not.

hamiltonkg

Once the Soviet Union collapsed and the quote-unquote Marxist economy was dismantled, prices across the consumer spectrum skyrocketed by an average of between 400-500%.

This hyperinflation was fairly predictable, as just about every single time that price controls have been applied to a particular good, their removal has caused a shock to the economic system which sees that price buoy up and down while the 'invisible hand' adjudicates the good's 'true' value.

When the newly created Russian Federation decided to remove the widespread price controls across literally all consumer goods (part of the Yegor Gaidar-led so-called 'Shock Therapy' reforms which sought to modernize the Russian economy overnight) there was huge pushback-- both from within Russia itself by the citizenry as well as from neighboring nations who largely relied on the Russian economy like Ukraine, Belarus, and others.

Because of that, the Yeltsin administration instituted a price-ceiling (but not exactly price control-- meaning the price was allowed to fluctuate to a point, but not completely freely) on the most basic "life essential" goods. That list included a bit more than those items you outlined in your question, such as:

  • Bread
  • Milk
  • Baby food
  • Sugar
  • Salt
  • Matches
  • Vodka
  • Gasoline
  • Public transport
  • Communication services (this included telephone but very famously not television provisions).

Despite these ceilings (which the price of these goods immediately reached by the way), the Russian government also implemented a 28% consumer value-added tax (VAT) across the board, which these goods were not exempted from either.

Unfortunately, I think that might mean that only total shut-ins are going to be able to pull that entire list out of their hat, but this humble author might suggest perhaps a point assigned to any team that could get at least three of the available options.

Further Reading and Sources

Sharpiro, Margaret; Russian Price Controls Ending Dec. 16; Washington Post (1991)