The indicators turn red one after the other. Inflation, which has been soaring in Russia for months, accelerated further in April, reaching 17.8% year on year, according to data from the statistics agency Rosstat published on Friday, a level not seen since 2002. compared to April 2021, food prices in particular have soared by 20.5%. Basic products are among the most affected: cereals (+35.5%), pasta (+29.6%), butter (+26.1%) and fruits and vegetables (+33.0%) ).
Prices for audiovisual equipment, such as televisions, rose 22.7%, while prices for building materials rose 27.5%. Compared to March this year, prices rose 1.6% in April.
Inflation could reach 23% by 2023
Over the whole of 2022, annual inflation could reach 23%, before slowing next year and returning to the target of 4% in 2024, according to the Russian Central Bank. Inflation, galloping for months, is linked to the post-pandemic recovery and soaring commodity prices, to which are now added Western sanctions against Russia and their share of logistics disruptions. “Inflation is expected to remain high even if it is slowing down. There is a lingering effect of inflation,” explained Julien Vercueil, economist at Inalco during a recent CEPII conference.
The price hike undermines the purchasing power of Russians, who have little savings, and proves to be a headache for the authorities, who have attempted controversial price control measures. This inflation will also put many sectors already damaged by the two long pandemic years in great difficulty.
The Central Bank drastically increased its rate to 20% in the wake of the first sanctions after the entry of Russian troops into Ukraine at the end of February, before starting a gradual decline. It is currently at 14%.
President Vladimir Putin assured Thursday that the West suffered more than Russia from the sanctions imposed on Moscow because of the offensive in Ukraine, boasting of a great resistance of the Russian economy in the face of “external challenges”.
A dizzying recession in 2022
It is still difficult at this stage to assess the extent of the recession, but most economists are counting on an abysmal drop in gross domestic product this year.
After plunging -3% in 2020 and rebounding to 4.7% in 2021, GDP could fall again to dizzying levels this year. “Gross domestic product (GDP) will fall sharply, around 5% but maybe 9% in 2022. Never has Putin’s Russia experienced such a recession. said Julien Vercueil, one of the few French economists specializing in Russia. This fall in activity could obviously cause immense damage even if the Russian authorities and the central bank continue to intervene massively.
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