Russians are starting to feel the economic pinch after Western countries imposed an unprecedented set of sanctions over Moscow’s invasion of Ukraine.
Following weeks of mounting tensions, Russian President Vladimir Putin ordered a land, sea and air invasion on February 24, triggering a wave of financial restrictions that have plunged the value of the ruble, skyrocketed inflation and left many jobless.
In a speech to government ministers broadcast on Wednesday, Putin insisted Russia could withstand the “economic blitzkrieg”.
Below is a look at how sanctions are biting daily life for Russians:
The official Rosstat statistics agency said on Wednesday inflation was 2.1 percent between March 5-11, the second-highest weekly figure in more than 20 years. According to the Ministry of Economics, annual inflation jumped to 12.5 percent as of March 11 from 10.4 percent the previous week.
The business newspaper Kommersant reported a 10.4 percent increase in food prices from February 26 to March 4 – the highest rise since 1998.
A social media user from the southwestern city of Samara, who identified himself as Ivan, said a can of tuna now costs between 160-180 rubles, from what used to be 130 rubles. He also said in a Twitter post that sugar could not be found in many shops.
The Russian currency has lost an estimated 20 percent of its value over the past three weeks, triggering many retailers to raise their prices.
One of these is Procter & Gamble, which raised its prices by an average of 40 percent, Kommersant reported, because of higher costs in logistics, materials and the drop in the ruble. Female hygiene products now cost as much as 30 percent more.
To contrast cost increases, retailers committed to a five percent markup of basic goods, including dairy products and some vegetables, TASS news agency reported.
Sasha, a woman living in Saint Petersburg, who asked to remain anonymous, described an “endless queue” in front of pharmacies with prices of medicine increasing. Two of her friends, she said, were considering going to Finland to get needed medication.
While sales of drugs are not subject to sanctions, prices are expected to increase, though not as much as other goods, after major shipping companies halted their services to Russia. Local media reported drug prices in the Saratov region increased by 2.3-6.7 percent.
Andrey Baratov, head of the regional department of Roszdravnadzor – the federal service for surveillance in healthcare, was quoted as saying it was not expecting a “fatal” increase in drug prices, though he said authorities heard complaints from citizens about the lack of vital medicines in pharmacies and doubts over Russian medicine suitability in replacing foreign drugs.
After some hesitation, Western nations agreed to remove some Russian banks from the SWIFT international payment system, meaning companies like Visa, Mastercard and others would greatly limit their services.
Such a move, coupled with other sanctions, could cause Russia’s economy to contract by 10 percent, according to Elina Ribakova, an economist at the Institute of International Finance.
While official numbers are not yet available, the closure or departure of a large number of multinational companies such as Apple and IKEA are expected to have a significant effect on employment figures. US fast-food franchise McDonald’s lamented the fallout for about 62,000 people employed at 850 restaurants in Russia before halting its operations on March 8.
An analyst quoted by Kommersant estimated an “inevitable” fall in wages and an increase in unemployment of about seven percent by the end of 2022.
Sergei Grishunin, managing director of the National Rating Agency, told local news site Gazeta.ru it expects “explosive growth” in the number of bankruptcy cases in 2022, more than double compared with the previous year.
Holidays for Russians next summer are not going to be the same as tour operators expect a 30 percent increase in prices within the country, local media reported.