Bread Crisis Looms as Government Price Caps Threaten Russias Bakery Industry

Russia’s favored bread, the pre-sliced white loaf, might disappear from retailers if the government implements stringent price controls on commonly consumed products, the proprietor of the nation’s largest bakery and confectionery group cautioned on Monday.

This warning followed comments by Prime Minister Mikhail Mishustin in March, indicating that the administration was ready to take the «strictest measures» to control food price inflation. He specifically mentioned that regional authorities could impose limits on the profit margins of essential food items, which experienced their most significant price increase in nine years last year and are still rising.

Alexei Tulupov, head of the Kolomensky bakery, told the RBC news outlet that price controls on bread could push bakeries toward insolvency, lessen the diversity of bread options available, or lead to product substitutions.

Tulupov suggested that regulating egg prices resulted in a cheaper, lower-quality liquid egg product coming onto the market.

“If similar policies are applied to bread, we could see sliced loaves quickly vanish from the shelves,” he remarked.

According to data from the state statistics agency Rosstat, the cost of wheat bread rose by 14.6% last year, which is one and a half times greater than the overall inflation rate, reported by the government at 9.5%.

Furthermore, bread prices increased by another 6.2% from January to May 2025.

Since the onset of the full-scale invasion of Ukraine in February 2022, bread prices have escalated by over 35%.

The expenses associated with producing bread also surged by an average of 27% in 2024, as stated by Dmitry Semenov, president of the Russian Bakers Union.

“Present lending rates make borrowing unmanageable; a high level of profitability is required to handle such debts, yet bakeries work with very tight profit margins,” he pointed out, referencing the Central Bank’s key rate of 20%.

Semenov also mentioned that labor shortages could reach as high as 40% of the required workforce in some businesses.

Tulupov identified the primary cost influences for bread producers as raw materials, labor costs, and logistics.

“Logistical expenses are at least as high as, if not surpassing, those for flour,” Tulupov explained to RBC.

These costs are compounded by the short shelf life of bread, necessitating prompt delivery to stores.

In March, leading bread manufacturers notified retail chains of an impending 10 to 12% increase in wholesale prices, as reported by the Vedomosti business newspaper.

Manufacturers cited rising costs for warehousing and transportation, greater tax obligations, and a spike in flour prices due to a poor harvest last year as the main contributors to these price increases.