Pinching those Rubles

The weakness of the ruble, one of the worst-performing currencies of the year, has fueled inflation of 7.5 percent; so have the Kremlin’s various bans on food from abroad in reaction to Western sanctions. Some bans, such as the one on pork from the European Union, have been in place for most of the year, and others were imposed this summer. According to the July inflation report by the Federal Service of State Statistics, prices of meat and poultry rose 11 percent in July from a year earlier. Milk and dairy were up 20 percent, although sanctions on dairy products are too recent to account for that spike. A jump in food prices for any reason is painful, as a third of ordinary Russians’ income goes to food.

Faced with inflation well above its target, the central bank has had to increase its key rate three times this year, to 8 percent, further hampering Russians’ ability to afford a mortgage or car loan. The drop in demand hurts, in a country where consumer spending accounts for half of the $2 trillion economy.

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