According to the latest figures, the cost of living in Russia has risen dramatically due to the country’s invasion of Ukraine.
Official figures show the price of some staples for the household, including sugar, have risen as high as 14% in the last week.
The inflation rate is expected to continue growing throughout Russia, where the rouble has sunk dramatically since the time that the Ukraine war started.
Its value has fallen approximately 22% this year. This has increased the cost of imports.
The data on inflation was released as the Russian market reopened for trading on Thursday, following a one-month break, with the vast majority of shares increasing in the course of a highly volatile session of trading.
The benchmark Molex index was up about 5.6 per cent at the mid-day hour in Moscow.
Analysts suggested that a plan by the government to purchase millions of dollars of Russian shares was helping to boost the market. It plummeted in the last month following Russia’s attack on its neighbour.
Trade restrictions on foreigners and short-selling remain in effect.
The rising cost of living
On Wednesday, the Russian economic ministry announced that annual inflation rose 14.5 per cent in the week that ended on March 18, which was the highest level since 2015.
According to the Federal State Statistics Service, the price of sugar increased by up to 37.1 per cent in specific regions of the nation, and it increased on average by 14 per cent.
Sugar, typically employed to store food and create liquor, is the most profitable commodity during the last week, an agency from the federal government discovered.
The cost of onion was the 2nd biggest increase over the week, rising 13.7 per cent across the country and 40.4 per cent in certain areas. Nappies, on the other hand, were 4.4 per cent more costly. The cost of black tea rose by 4 per cent, and toilet paper grew by three cents.
Stephen Innes, the managing partner of SPI Asset Management, said the prices were higher due to the lower value of the currency, the rouble.
“The biggest culprit is imported inflation,” Mr Innes said to the BBC. “Anything Russia imports is exponentially (pricier) due to the weaker rouble.”
The UK, as well as in the US and the European Union, have cut off some Russian banks from markets for financial services within the west.
They also banned transactions in Russia’s central bank, the state-owned investment funds, and Finance Ministry.
The Bank of Russia more than doubled its interest rate from 20 per cent in March to prevent its currency from falling further.
Many Western companies have pulled out of Russia due to the conflict in Ukraine. For instance, Nestle, the Swiss company that makes food Nestle has pulled out important brands like KitKat and Nesquik.
Social media videos show people rushing to purchase sugar and buckwheat from the supermarkets in Moscow.
Vice-premier Viktoria Abramchenko has told Russians that the country has become “fully self-sufficient when it comes to sugar and buckwheat”.
“There is no need to panic buy these goods. There is enough for everybody,” she added.
- The squeeze on families overpowers tax reverse
- Inflation hit the new record for 30-years in February
Russia has reacted strongly to international sanctions and has threatened to take over the assets of companies that have ceased operations within the country.
It was sanctioned by US President Joe Biden and 12 other US officials this week.
This week, Russian President Vladimir Putin declared that the country would begin offering natural gas for sale to “unfriendly” countries. It is believed the move is targeted at strengthening the currency.
The EU depends heavily on Russia for 40 per cent of its energy needs. However, many of the agreements are negotiated in euros, and it’s not known what would happen if Russia could change these contracts.
The announcement of Russian President Vladimir Putin pushed the rouble to its highest level in three weeks. The currency later ended the day in 97.7 for the USD.