Russia’s inflation rate has reached nearly 10%, with prices rising by 25% in some areas over the past year. The country is struggling to balance its military spending and wage increases, which are driving up costs for companies.
The Kremlin’s efforts to boost economic growth have led to a surge in wages, particularly in non-defense industries. However, this has resulted in higher prices, making life difficult for low- and middle-income Russians.
The central bank raised interest rates to 21% in October, but economists predict that inflation will persist due to the labor shortage. Russia’s President Vladimir Putin believes that the country needs over 1 million new workers to address unemployment, which he claims is “virtually non-existent.”
Analysts warn that the economy faces a slow-burning crisis, driven by the Kremlin’s spending and lack of investment in other sectors. The International Monetary Fund predicts a growth rate of 3.6% for Russia this year, but warns that sanctions have not had a significant impact.
Despite economic challenges, many Russians are benefiting from higher wages, particularly those in IT, construction, and manufacturing. However, public sector workers, pensioners, and social benefit recipients are struggling with rising prices.
The Russian economy’s long-term prospects look bleak, with the UN predicting a shrinking population and aging workforce. The country faces significant challenges ahead, including adapting to a post-war economy and reorienting its industries away from military spending.
As the war in Ukraine continues, Russia’s economy remains vulnerable to shocks, including lower commodity prices and trade wars. However, for now, the Kremlin appears determined to continue funding its military efforts, even if it means facing economic challenges down the line.
Source: https://edition.cnn.com/2024/11/18/economy/russia-inflation-new-heights-intl-analysis/index.html