Inflation in Russia at 8.1%

RUSSIA / FSU POLITICS - In Brief 22 Nov 2021 by Alex Teddy
On November 18 the Russian Statistics Agency (Rosstat) said that inflation in October 2021 was at its highest level since 2015. The Central Bank of Russia has raised interest rates several times in a failed attempt to curb this. The key rate is 7.5% and is surely going to rise. It is anticipated that it will rise to 8.5% in December 2021. The economy is jeopardized by obstinate inflation. Inflation is rising given that it was 7.4% in September 2021The Central Bank of Russia warned that inflation may be a long-term headache. Food prices have risen 12% in 2021. Some staples such as fruit and eggs are up 25%. This has a disproportionate impact on low income people. Russians rate the cost of living as their main problem. Living standards are now 5% lower than in 2013. Nevertheless, the 2021 figure for living standards is an improvement on annus horribilis 2015.Stagflation is a worldwide problem. There are also supply chain problems.Russia fears an inflationary spiral. Panic buying could drive prices even higher. Inflation expectations are worse than observed inflation. Analysts estimate that inflation will peak in early 2022 and then slowly fall.Inflation is a boon for Russian discount retailers. People are becoming very penny pinching. However, small businesses are declining. They have a smaller share of the economy than at any time for the last 10 years. That is because they do not have economies of scale and cannot cut prices. Moreover, government financial support in 2020 went to major corporations more than SMEs.

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