Russia's Economy Sputters Amid High Inflation, War Spending

Despite three and a half years of international sanctions, Russian grocery store shelves remain full, and people are not going without their creature comforts. However, inflation is cutting into economic growth, and a tipping point may have arrived for the Russian people. Higher salaries and consumer spending due to war-related spending have caused higher inflation, which is now affecting economic growth. The Russian economy is slowing down, with consumer spending falling back sharply in 2025.

Title: Russia's Economic Tipping Point: Inflation and Sanctions' Impact

Despite three and a half years of international sanctions, Russian grocery store shelves remain full, and consumers are not going without their creature comforts. However, inflation is cutting into economic growth, and a tipping point may have arrived for the Russian people. Higher salaries and consumer spending due to war-related spending have caused higher inflation, which is now affecting economic growth. The Russian economy is slowing down, with consumer spending falling back sharply in 2025 [1].

Alexander Kolyandr, a senior researcher for the Center for European Policy Analysis in London, notes that the Russian government was successful in boosting economic growth for two years by sweeping problems under the carpet. However, he warns that this cannot continue indefinitely. "It's like running on amphetamines — you can't do it forever," Kolyandr said [1].

Inflation in Russia has reached nearly nine per cent, with food inflation even higher. This has led to a decline in consumer spending, reflecting the economic slowdown. Despite the rising costs, many Russians are still managing to maintain their lifestyles, albeit with some adjustments. "We still buy what we need, but when something gets really expensive, we make choices," said Alexey, a 66-year-old pensioner [1].

The Russian government has implemented measures to insulate itself against public backlash, including lucrative signing and death bonuses for soldiers and their families. These bonuses, which can reach up to seven million rubles (around $100,000 Cdn), help mitigate the economic impact of the war on families [1].

However, the economic situation is increasingly being felt by Russians far from Ukraine's borders. Ukrainian drones have been causing flight cancellations and energy infrastructure disruptions, further impacting the economy. "All that trickles down and annoys people," says Kolyandr, but the public remains largely supportive of the war [1].

The upcoming summit between Donald Trump and Vladimir Putin in Alaska marks a critical point in diplomacy to end the conflict on the battlefield. However, the economic situation in Russia may not improve significantly in the near future. Kolyandr believes that even if the summit leads to a ceasefire, sanctions are likely to remain, further hindering economic recovery [1].

References
[1] https://www.cbc.ca/news/world/russia-economy-1.7609066