Russia’s surging inflation rate will remain high through spring of next year, propelled by the devaluation of the ruble currency and the steep cost of Moscow’s bans on food imports from Western countries that sanctioned it over Ukraine.
The rapid tumble of the ruble, which has lost a third of its value so far this year, has accelerated inflation by raising the price of foreign imports.
The Russia ban on Western fresh products imports has triggered a rise in locally produced food prices such as pork and poultry.
Lack of competition from cheaper imported products is benefiting domestic producers. so for Russian consumers everything is getting more expensive.
However sanctions are not the major problem when it comes to the ruble,. The two main factors that contribute to weakening of the Russian economy are:
1-The costs of borrowing money, which increased even more than a year before the Western sanctions over Russian banks were applied in September.
2–The sharp decrease of the oil price under $100 per barrel. The OPEC announced late on November 27 that the oil cartel would not cut production, sending the price of oil around $70 per barrel. The announcement also sent the Russian ruble lower to the U.S. dollar and euro. The ruble dropped to over 50 against the U.S. dollar late on November 28 and dropped to 62.03 against the euro in early trading recovering to 61.41 by the close of the day.
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