The Russian economy is experiencing its highest inflation rate in over a year this May. This significant increase in inflation is adding substantial pressure on the central bank to hike the key interest rate. By raising the rate, the central bank aims to curb the accelerating price growth and stabilize the economy.
The escalating inflation poses a challenge for maintaining consumer purchasing power, making the potential rate hike a crucial step in restoring economic balance.
According to data released late Friday by the Federal Statistics Service, annual inflation in Russia surged to 8.3% in May, up from 7.84% in April. This marks the highest inflation rate since February of the previous year.
Furthermore, the month-on-month price growth saw a notable increase, rising to 0.74% in May from 0.5% in April. This upward trend in both annual and monthly inflation rates highlights the intensifying inflationary pressures within the Russian economy.
The International Monetary Fund predicts that Russia will achieve economic growth of 3.2% this year, despite the ongoing conflict raging for twenty-seven months. Far from being crippled, Russia’s economy is thriving.
However, “debilitating” sanctions have not led to shortages in shops; Russian supermarket shelves remain full. Nonetheless, rising prices are a concern, exacerbated by the departure of Western companies from the Russian market in protest against the invasion of Ukraine.