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Russia faces 6th straight month of price growth, Bloomberg reports

by Nate Ostiller and The Kyiv Independent news desk July 10, 2024 9:55 PM 2 min read
A view of the Russian Central Bank headquarters in Moscow on May 26, 2022. (Natalia Kolesnikova / AFP via Getty Images)
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Russia is facing its sixth straight month of growing prices that particularly impact the cost of food and fuel, Bloomberg reported on July 10, citing data from Russia's Federal Statistics Service.

Russia is burdened by enormous defense spending stemming from its full-scale war against Ukraine, which rose to almost 30% of its budget in 2024.

Russia's full-scale war against Ukraine has helped drive price inflation globally, in part due to disruptions to food and energy supplies. Western sanctions have also isolated Russia's economy while government spending continues to climb.

The annual Russian inflation rate for June was 8.59%, up from 8.30% the previous month. The figure is significantly higher than that of the U.S., which is expected to be around 3.1% for the month of June.

According to data from the International Monetary Fund (IMF), the inflation rate is also above the average for Eastern Europe and other countries neighboring Russia.

Prices for key food items in Russia have increased dramatically—vegetables cost 19% more than this point in 2023, and the price of potatoes rose by almost 34% from the preceding month.

The cost of fuel has also risen steadily over recent weeks.

The Bank of Russia has held interest rates at 16% since December 2023, but its chief, Elvira Nabiullina, cautioned that a "significant" increase may be required if the current rate of inflation does not subside.

Bloomberg wrote that these figures indicated the bank has "little choice but to further tighten monetary policy," leading to a likely increase in interest rates at a Bank of Russia meeting scheduled for July 26.

Russia struggles to control finances as Ukraine invasion spending soars
Since the full-scale invasion of Ukraine began in 2022, the Russian government has focused all of its financial resources on funding the war. As the war is the Kremlin’s number one priority, all tools at its disposal have been used: increased taxation, sovereign funds, domestic borrowing, and the p…
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6:52 PM

Ukraine's GDP grew by more than 4% in 6 months.

"Due to the high adaptability to difficult conditions and experience in responding to such challenges, the Ukrainian economy continued to grow" in June, said Economy Minister Yulia Svyrydenko.
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