RUSSIAN ECONOMY IS FACING INFLATION, RISING DEFENCE SPENDING, AND TIGHT BUDGETS

Mon 16 December 2024:

Russia faces a triple threat, rising inflation, soaring defence spending, and tightening household budgets. With inflation expected to reach 9 per cent this year and interest rates climbing to 21 per cent, many Russians are struggling to afford daily necessities.

Russia’s economy is facing severe inflation, driven by soaring defence expenditures linked to the ongoing conflict in Ukraine. Pensioners and low-income families are struggling the most, with essentials like medicine, meat, and clothing becoming unaffordable.

Defence spending for 2024 is projected at $125 billion, representing over 6 per cent of the country’s GDP. This accounts for nearly 40 per cent of total state spending, a 70 per cent annual increase.

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To combat inflation, Russia’s central bank has raised its key interest rate to 21 per cent, the highest since 2003, making loans prohibitively expensive for consumers and businesses.

In small towns like Dedovsk, 30 kilometres from Moscow, the effects of inflation are harshly felt. Pensioner Zinaida Kudriavtseva lives on just 16,000 roubles, or $150, per month. Rising prices mean she can no longer afford necessary medications or new clothes.

She told AFP and I quote, “I limit myself in many things now: I don’t buy beef, it’s expensive for me. I still buy chicken for soup, milk and bread. I rarely buy cottage cheese either, because everything is very expensive! I buy just enough so that I don’t starve to death. I’m telling you honestly!”

Another resident, Viktor Markov, reports daily price hikes for basic groceries, with apples costing 150 roubles and coffee reaching 400 roubles.

Defence spending has surged to support the conflict, but every day Russians are left paying the price. With inflation squeezing budgets and interest rates at record highs, many are forced to cut back on even basic necessities.

He told AFP and I quote, “What can we expect? The war goes on. And war requires resources.”