Vladimir Putin keeps vodka cheap as Russian economic crisis deepens

Russian president moves to protect most precious resource

Tom Mendelsohn@Tom_Mendelsohn
Thursday 25 December 2014 13:17

He stayed strong as the price of oil cratered, but Russian president Vladimir Putin has finally been forced to intervene on an even more critical commodity: vodka.

Russia's economy has been rocked by international sanctions and the lowest oil price since 2009, but Putin's announcement, that high vodka prices encourage the production of potentially harmful bootleg spirits and should be capped by the government, is possibly the first sign that economic pressures are getting to him.

The rouble has crashed over the last few months, and is now worth slightly more than a penny, and Russia is facing its worst economic crisis since 1998, when it defaulted on its debt.

Vodka is the glue that binds Russia, but it is also a major cause of ill-health in the former superpower. According to one recent study, a quarter of all Russian men will die before they reach their mid-fifties, and their high consumption of alcohol - particularly vodka - is seen as partly to blame.

The price of the spirit is up 30 per cent in the last year, to around £2.70 for half a litre.

"The overshoot of vodka prices leads only to increasing consumption of bootleg [spirits]," said Putin. "I think the relevant structures should think of that".

Russia's economy is expected to slide into recession in 2015 due to falling oil prices and Western sanction over the Ukraine crisis. Annual inflation, meanwhile, is expected to exceed 10 per cent this year.

Additional reporting Reuters

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