Inflation in Russia continued to rise in December. This is a direct result of the enormous increase in government spending on the military, Western sanctions and labor shortages.
Hundreds of thousands of men are at the front or have fled abroad because of the Russian offensive in Ukraine. Therefore, companies have to offer attractive salaries to find employees, which fuels inflation.
Compared to the same month last year, consumer prices rose by 9.5 percent, statistics agency Rosstat announced on Wednesday. In November the price increase was 8.9 percent, well above the Russian central bank’s target of four percent.
Bleak prospects
The central bank has now raised the policy interest rate to 21 percent. This is the highest rate since 2003. High interest rates are causing dissatisfaction among representatives of Russian business: there are no incentives for investment. The Russian government already expects a slowdown in economic activity in 2025.
Source: Krone
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