Russia: From Isolation to Rising Inflation

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sberbank

Don’t take life too seriously

You will never get out of it alive.

-Elbert Hubbard

Russia is in serious trouble.  Is there a need to take it seriously or we can keep laughing and let it slide?

I want to provide an overview about current problems in Russia and to say a few words about what is likely to be intriguing for a lot of people from all countries.

First of all, I cannot stress this highly enough: we all hope for the best but we also have to be prepared for the worst.   But all of us have to take this situation seriously and try to do our best to decide problems that surround us.

Inflation in Russia is rising at a rate of 12.5% per annum. This is maximum inflation since last seven years. According to Russia’s economic news, in the month December, 2014 the inflation was 2.6%, and the yearly inflation for 2014 was 11.4%. The highest level of growth in consumer prices was recorded in 2008 and amounted to 13.3% (http://www.vestifinance.ru/articles/66050). Also significantly important is the price fluctuation factor on the oil (frequently termed as black-gold) market. The year 2015 became a record year for Russian oil prices. There was production of 534 million tons of oil, almost one and a half per cent more than in 2014. Russia now shares the top place with Saudi Arabia in terms oil production. Export of oil has also grown up at once by 10%.

It is worth mentioning that almost all the major producers of “black gold” are increasing production in pursuit of retaining its market share. This is one of the reasons why prices for oil are falling down. http://www.vestifinance.ru/articles/66059

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According to Forbes.com the biggest problem for Russian people is inflation. Levada recently conducted a poll on Russia’s most serious concerns, and inflation as a serious concern was shared by an overwhelming 71% of respondents. This was more than 30 points ahead of the next most frequently cited problems like poverty and growing economic inequality, and was ranked several points higher than in 2013. Inflation has been remarkably consistent as a source of concern over the past 8 years, ranking first among Russia’s biggest worries.

Why is inflation such a concern? Large numbers of Russians, including the legions of pensioners, live on fixed incomes that, while higher than they were in the past, don’t leave much room for maneuver. And, on an average, Russians spend relatively large amounts of their income on perishable items (like food) that are notoriously prone to rapid price shifts. (Source)

In its December monetary policy, the Central Bank indicated that it expects inflation to end 2016 at around 6.0% per annum and that it will be on track to reach the 4.0% per year inflation target in 2017. But, Panelists see inflation ending 2016 at 7.4%, which is unchanged from last month’s forecast. For 2017, participants expect inflation to ease to 6.0%. https://www.focus-economics.com/country-indicator/russia/inflation

Inflation is a long sleeping giant. Even some developed economies are seeing rising prices. How can a country grow with inflation? Well, it needs the participation of the citizens to achieve a good growth rate. There are lots of ways around you which directly or indirectly affect the country’s growth rate like investing correctly, saving rate, working hard, and giving people the best quality of your products or services. Try to control your life and don’t let it slide.

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Kseniya Ponomareva
Kseniya takes a lot of interest in global diplomacy. She is a teacher of English as second language and is a professional interpreter in Russian, Chinese and English languages. She has translated a number of articles for various Russian military journals.