In Russia, Butter Prices Drop to Two-Year Lows

Butter: Impact of Increased Supply

According to the Rusprodsoyuz association, the average retail price for butter in December was 1,178.8 rubles per kg, which is 0.5% lower than December 2024. This marks the first time in a year that prices have fallen below last year's level.

The key factor has been the positive dynamics in the production of raw milk and finished products. According to the Russian Ministry of Agriculture, raw milk production increased by 3.5% year-on-year, and butter production by 2.9%. From January to October, butter output reached nearly 285,000 tons, which is 2.6% more than the same period last year.

The increased supply has allowed producer prices to remain at last year's levels, while retail prices have dropped by 0.7% over the last month and by 1.1% year-on-year.

Retail Pricing Strategy and Supply Chain Pressure

According to the Federal Antimonopoly Service of Russia, the average markup in ten federal retail chains for "first price" butter in mid-December was just 1.3%. For the entire basket of socially significant goods, this figure reached 4.7%.

The Association of Retail Companies (AKORT) notes that retail prices for butter have been continuously declining since mid-September. According to the association, the minimum price in retail chains by mid-December decreased by 24% year-on-year to 748 rubles per kg. The purchase price dropped by 12% to 755 rubles, indicating that basic positions are being sold with a negative markup.

Experts emphasize that price pressure quickly translates from retail to processors and then to milk producers. Given high costs—energy, packaging, logistics, and credit resources—this increases risks for farmers and processing enterprises.

Demand, Imports, and Stock Levels

According to analytical agencies, butter consumption at the beginning of the year decreased by about 9%. Some consumers have switched to alternative products. Additional pressure was exerted by imports: existing tariff concessions allowed up to 25,000 tons of butter to be imported from India and Iran duty-free.

Butter stock levels were more than twice last year's figures, intensifying the price correction after peak values at the end of 2024.

Meanwhile, butter price dynamics differ significantly from overall food inflation. Over the first ten months of 2025, food prices rose by more than 11%, while there is stabilization in the dairy segment.

Correction Beyond Dairy

Price reductions have also affected other categories. According to retail networks and industry associations, the following decreases have been recorded over the year:

• chicken eggs — by 17–22%,

• potatoes — by 24–30%,

• rice — up to –41%,

• sugar — by 14%,

• grains — by 3–5%,

• certain vegetables — by 16–38%.

Out of 25 basic food products, price reductions have been recorded for 16 items over the year. The main reasons are high yields, increased meat and egg production, and the mismatch of seasonal demand and supply peaks.

Assessments and Forecasts for 2026

Experts agree that the current dynamics do not represent deflation in the classical sense but reflect market leveling after a period of price tension. Butter remains a sensitive category used by retailers to retain consumer traffic.

Most forecasts for early 2026 suggest relative stabilization of butter prices with possible fluctuations within ±3–5% provided there are no external shocks. High stock levels and restrained demand will support this trend, but the impact of inflation, logistics costs, and income dynamics will persist.

Denis Ternovsky, a senior research fellow at the Center for Agrifood Policy at the Institute of Applied Economic Research (IPEI) of the Presidential Academy, noted that the rise in butter prices is a global trend associated with increased consumption of animal fats.

According to him, the market is currently trying to find a balance between increased prices and the demand they restrain. "Most likely, it will attempt to reach a plateau of relatively stable prices, as it was from 2017 to 2023, but this plateau will be higher. At the same time, price dynamics will largely depend on income dynamics: with stagnation, butter is one of the first candidates for spending cuts and, consequently, demand and real prices," Denis Ternovsky noted.