(Moscow, November 28, 2024) – Russia’s inflation rate has surged to a record high in November, driven by rising food prices, a weakened ruble, and the economic strains of ongoing sanctions and war efforts. The Russian economy is struggling under the weight of military expenses, a poor harvest, and increasing Western sanctions due to the war in Ukraine.
(Moscow) – Russia’s inflation rate has surged to alarming levels in November, hitting its highest point in two and a half years. The Federal State Statistics Service (RosStat) reported on November 27 that the consumer price index (CPI) saw a significant increase during the week of November 19-25, with prices rising by 0.36%. This marks a 1.15% increase since the beginning of the month and an overall rise of more than 8% since the start of the year.
The sharp rise in inflation is the result of several converging factors, most notably the effects of the ongoing war in Ukraine and the tightening of Western sanctions. Russia’s economy is feeling the strain, especially from the mounting costs of military spending and domestic production required to support the war effort. The consequences are being felt across Russian society, with everyday costs rising sharply, particularly in food prices.
Groceries have seen the most significant price hikes. For example, the cost of potatoes has skyrocketed by 78.4%, cabbage by 30.7%, and beetroot by 27%. Even basic staples like butter have risen by 31.6%. These increases come despite the Russian government’s attempts to mitigate the damage by increasing imports from countries like Turkey and Iran. Overall, food inflation has exceeded 10% for the first time since January 2023, according to the Moscow Times.
The Russian ruble is also facing severe pressure. As of November 28, the ruble exchange rate has fallen significantly against major currencies. The ruble is now valued at 114.50 per U.S. dollar, 120.83 per euro, and 15.16 per Chinese yuan, according to the London Stock Exchange Group (LSEG). The drop in currency value comes on the heels of new U.S. sanctions targeting 50 Russian banks, including Gazprombank, which has been a key financial channel for Russia’s oil and gas exports. These sanctions are expected to make international payments for Russian energy exports more difficult, further harming Russia’s foreign currency reserves.
The Central Bank of Russia has decided to halt foreign currency purchases for the rest of the year, a move that could put additional pressure on the ruble. The ruble’s weakness is expected to deepen as the holiday season approaches, with Russian businesses increasing imports to meet rising consumer demand, further depleting the country’s foreign exchange reserves.
The combination of rising inflation, a weakening ruble, and escalating war costs is putting immense pressure on Russia’s economy. Analysts predict that these challenges will likely worsen, regardless of the outcome of the ongoing conflict in Ukraine. For ordinary Russians, the soaring costs of basic goods and the plummeting value of the ruble are becoming an inescapable reality. The road ahead appears difficult, with no immediate solutions in sight for Russia’s economic turmoil.
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