Things are going downhill

Russians are increasingly struggling with inflation

For many, there is not enough money to go around. Here: the GUM department store on Red Square in Moscow.(Bild: ASSOCIATED PRESS)

Inflation in Russia continued to rise in December. This is a direct consequence of the massive increase in government spending on the military, Western sanctions and the labor shortage.

Hundreds of thousands of men are on the front line or have gone abroad due to the Russian offensive in Ukraine. Companies therefore have to offer attractive salaries in order to find staff, which is fueling inflation.

Compared to the same month last year, consumer prices rose by 9.5 percent, according to the Rosstat statistics office on Wednesday. In November, prices had risen by 8.9 percent, which was already well above the Russian central bank's target of four percent.

Gloomy outlook
The central bank has now raised the key interest rate to 21 percent. This is the highest rate since 2003, but the high interest rates are causing displeasure among Russian business representatives: there are no incentives for investment. The Russian government is already anticipating a slowdown in economic activity in the course of 2025.