London, September 12 (FinanceFlashNews.com) – Russia’s inflation rate slightly eased in August, but it remains more than double the central bank’s target, largely due to heavy spending on the conflict in Ukraine. This is according to official data from Rosstat, Russia’s state statistics service.
Minimal Decrease in Inflation
According to Rosstat, the annual inflation rate in August 2024 dropped slightly to 9.05% from 9.13% in July. However, it remains far above the central bank’s target of 4%.
Concerns About Stagflation
These figures come after a reported slowdown in Russia’s economic growth. In the second quarter of 2024, the economy grew by 4%, down from 5.4% in the first quarter. This has raised concerns that Russia may be heading toward stagflation, characterized by rising prices and weak economic growth.
Heavy Defense Spending Pressures Economy
Russia’s central bank has aggressively raised interest rates over the past year in an effort to cool inflation. The central bank has noted that economic growth is being fueled by massive government spending on military operations. In 2024, Russia plans to spend nearly 9% of its GDP on defense and security, a figure President Vladimir Putin described as unprecedented since the Soviet era.
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