The Soviet government doubled the price of gasoline yesterday to $1.10 a gallon and quadrupled coffee to $13.25 a pound in a sudden upward "adjustment" of some luxury consumer goods. A pound of instant coffee will now cost $38.
The State Committee on Prices also increased the cost of gold and platinum jewelry by 60 percent and chocolates and auto parts by as much as 30 percent. At the same time, it marked decreases of as much as 30 percent on such sluggishly moving goods as black-and-white television sets, small refrigerators, ready-to-wear garments and synthetic furs.
Nikolai Glushkov, chairman of the Prices Committee, said at a press conference that the "adjustments" would have no effect on the buying power of Soviet workers, who earn about $180 a month and receive heavily subsidized housing and utilities and free health care and education.
Glushkov indicated the gasoline increase is an attempt to discourage needless leisure driving and earn more rubles for further development of the nation's oilfields where production is lagging behind demand. But Western expert here termed the price hike "symbolic" since not more than 6 percent of Soviet gasoline is bought by private drivers and steep increases in this sector will hardly pay for the massive continued exploitation needed in the oilfields.
Hundreds of Soviet citizens had written the Prices Committee "emphasizing the unjustifiably low price of gas in our country," Glushkov said. "We decided to satisfy them." The new cost still gives Soviets the cheapest gasoline in Europe. The retail increase will not affect the price of exported Soviet gasoline, a major hard currency earner that is pegged to international oil cartel prices.
A source here said the effect on gas consumption "probably will be minimal anyway." New cars cost at least $7,000, a huge sum at Soviet pay rates. "A person who can afford that price can pay for the gas to run it" said the observer.
Just a year ago, the government imposed major increases on air, rail and taxi travel and many muscovites returned to public transit instead of taking cabs. Subway, bus and trolley fares have been maintained at the equivalent of no more than 8 cents for decades.
Glushkov emphasized that the increases do not affect such necessities as meat and milk, where prices were last raised in 1962, or bread and cereal, last raised 25 years ago. He said the buying power of Soviet citizens continues to improve.
He threw some light on the complexities of running this centrally planned, heavily subsidized and controlled economy by describing how government "compensations" will be given to state enterprises whose budgets have long been set. This is to cushion them from the higher gas prices and the possible impact on operations. The "compensations," not spelled out, hint at strong competing influences within the government that cannot always be satisfied, not unlike the special agricultural and industrial subsidies voted annually by the U.S. Congress.
At the same time, the central authorities displayed a whimsical paternalism, decreeing that newlyweds buying wedding rings will be spared the 60 percent increase applying to gold. The government will give $50 to buy the ring that Russian women traditionally wear on the third finger of their right hand.
Gold jewelry, rare in Moscow stores, suddenly began appearing in some display cases and lines quickly formed.
Coffee increases presented an intriguing mystery. The commodity generally has not been available here for months except in stores for foreigners and privileged Russians. But with the price suddenly at $13 dollars a pound for raw or roasted beans and $38 for a pound of instant, coffee was again being sold yesterday. A long line formed at G.U.M., the big department store on Red Square, where a salesperson said there had been no coffee since last summer.
Glushkov denied that the state has been waiting until the price was right to sell the beans -- which unlike in America are considered a luxury. He said the government annually buys about 42,000 tons of coffee and, at the recent high world prices, was losing vital hard currency and taking a financial loss on resale.
Never mind that the Soviets have put the price here up just as world coffee prices are starting to decline.
"No country sells at the price it buys things," Glushkov said in a down-to-earth formulation of one of capitalism's first truths.