Russia confronts highest inflation in 17 months amid economic pressure
Date
8/11/2024 5:58:46 AM
(MENAFN) In July 2024, Russia's inflation rate surged to 9.1 percent, marking the highest level recorded in approximately 17 months. This increase, up from 8.6 percent in June, represents the steepest rise since February 2023. The Russian central bank had previously indicated that a combination of a severe energy crisis and a reduction in consumer demand had driven inflation beyond previous forecasts, prompting the latest hike in interest rates.
The latest data highlights a notable 11.4 percent increase in service sector inflation, underscoring the widespread impact of rising costs. In response to escalating inflation, the Russian Central Bank raised its key interest rates to 18 percent in July, marking the sixth rate increase within the past year. This move aims to mitigate the effects of inflation, which has been exacerbated by the economic pressures of the ongoing conflict in Ukraine and the resultant high government spending and elevated wages.
Russian Central Bank Governor Elvira Nabiullina noted the challenges faced by Russian businesses, including rising costs and difficulties in financial transactions, compounded by Western sanctions targeting Russia's trading partners. The central bank acknowledged that inflation rates are accelerating significantly beyond their April forecast, reflecting the broader economic strain and rapid price increases experienced across various sectors.
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