The shelves of Moscow supermarkets are filled with a plethora of goods, ranging from fresh fruits and vegetables to high-quality cheese and meat products. However, due to high inflation rates, the cost of these items has been steadily increasing. For cash-strapped shoppers, this means that their wallets feel ever emptier.
In order to combat the rising inflation, the Russian Central Bank has raised its key lending rate four times over the course of this year. The most recent increase brought the rate up to an unprecedented 15%, almost double its rate at the beginning of the year. The Central Bank also forecasts that the full-year inflation rate and next year’s inflation rate will hover around 7.5%.
The effects of the rate hikes have been noticeable – although the inflation rate may be an understatement. Customers of Moscow supermarkets, like Roxana Gheltkova, have noticed drastic price surges when it comes to staples like meat, dairy, fruits, and vegetables. “If we talk in percentage terms, then, probably, (prices) increased by 25%,” Gheltkova remarked. Other customers, like pensioner Lilya Tsarkova, struggle to make ends meet. “No, of course not,” she said when asked if her income was enough to cover rent and food. “I get help from my children. Without their assistance, I don’t know how to pay rent and food.”
The Russian Statistics Service (Rosstat) also confirmed the steep price hikes of certain foods like cabbage (74% increase), oranges (72% increase), and cucumbers (47% increase).
The Russian government has budgeted a record amount for defense spending in 2024-2026. Max Blant, a Russian economy analyst based in Latvia, believes that this will only lead to higher inflation. “It is simply impossible to solve the issue of inflation in conditions…when the military-industrial complex receives unlimited funding, when everything they ask for is given to them,” Blant said in a statement.
The Central Bank’s rate hikes have had a stabilizing effect on the ruble’s exchange rate – currently, it stands at 88 to the U.S. Dollar, a significant improvement from the 100+ rate it experienced earlier in the year. However, the cost of imports is still quite high due to the sanctions imposed by the West following Russia’s military operation in Ukraine.
Although the current inflation rate is still quite high, the Central Bank’s rate hikes have gone a long way towards curtailing it. It is up to the Russian government to take the next step in stabilizing the economy and keeping prices reasonable.
In the meantime, customers must continue to make do with tighter budgets. It is an unfortunate reality, but it is a reality that is sure to improve as the Russian economy continues to grow and stabilize.
