Russia inflation accelerates to 6.7%

People walk past the Kremlin’s Spasskaya tower in downtown Moscow on November 10, 2023. – Inflation continued to accelerate in October in Russia, reaching +6.7% over one year, according to figures published Friday by the national statistics agency Rosstat, further eating away at the already undermined purchasing power of Russians. by the effects of sanctions and a weak ruble. The price increase reached exactly +6.79% year-on-year in October, compared to +6% in September, according to Rosstat, continuing its upward trend observed since the spring. (Photo by Alexander NEMENOV / AFP)

MOSCOW, Nov 10, 2023 (AFP) – Russia’s annual inflation rate accelerated to 6.7 percent in October, the country’s federal statistics agency said Friday, as a weak currency and surging military spending push prices higher across the economy.

Rising prices have caused concern for the Kremlin and Russia’s Central Bank, which has raised interest rates to 15 percent in a bid to battle inflation.

Earlier this month, President Vladimir Putin urged his government to “reduce” inflation in a televised meeting.

October’s annual inflation rate of 6.7 percent was up from six percent in September and is the highest level since February.

Russia officially targets an inflation rate of four percent.

Putin and Russian officials have hailed Russia’s economic performance since it sent hundreds of thousands of troops into Ukraine last February.

Economy Minister Maxim Reshetnikov said Friday that Russia’s GDP will expand by three percent this year.

But independent economists say high inflation is just one symptom of deeper economic problems.

Last month, Russia reimposed some currency controls after the ruble fell below the symbolic level of 100 against the US dollar over the summer.

It has since recovered to around 92.

A huge increase in spending on the conflict in Ukraine, which looks set to drag into a third year, is also limiting Russia’s ability to tame rising prices.

Moscow will raise its defence spending by 70 percent next year to a post-Soviet record of six percent of GDP, according to an annual budget approved by lawmakers.

Meanwhile record low unemployment after hundreds of thousands of workers have been called up to the army, fled to avoid being drafted or been redirected to work in arms factories, has created labour shortages across the economy.