Russian inflation strikes six-year high amid Ukraine war, sanctions

Consumer price inflation in Russia, which has been accelerating for months, hit a six-year high in February, Russia's national statistics agency said Wednesday.

The 9.15 per cent annual inflation rate recorded last month by Rosstat was also the first time it has exceeded nine per cent since January 2016.

Food prices were up nearly 11.5 per cent on an annual basis.

The inflation rate is more than double the four per cent target of the Russian central bank and the data does not yet include the effect of Western sanctions imposed on Russia over Ukraine.

High inflation has already hit the purchasing power of Russians, who have little savings, and proved a headache for the authorities in recent months.

Western sanctions are likely to drive up prices for many goods even higher, especially as the Russian rouble has lost around 40 per cent of its value since the start of the year, making any goods that Russia manages to import even more expensive for consumers.

Capital Economics noted the weekly consumer price information released by Rosstat for the week to March 4, showed that the collapse of the rouble led to a sharp 2.2 per cent jump in prices week-on-week.

It said this rate was more than double the rate seen during the collapses of the rouble during the previous crises in 2008-2009 and in 2014-2015.

"The collapse in the rouble... and imposition of sanctions on Russia will push up inflation significantly in the coming months," said Capital Economics.

The Russian central bank more than doubled its main policy rate to 20 per cent last week as it sought to stop the haemorrhaging of the rouble, but to no avail.

With many Russians still remembering the devastating hyperinflation of the 1990s, supermarkets have announced measures to limit the rise in prices on basic foodstuffs.

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