The Kremlin says it is concerned about the level of annual inflation in Russia, which reached 8.59% over a year in June.

A record that Moscow could probably have done without. Annual inflation in Russia reached 8.59% in June over one year compared to 8.3% in May, according to figures from the national statistics agency Rosstat, released on Thursday, July 25 and consulted by AFP. This is the highest level since February 2023, well above the official target of 4% displayed by the authorities. The Kremlin says it is concerned by such an inflation rate, accelerated by the explosion of public spending intended to support the military assault in Ukraine.

“There are some inflationary processes, this is causing concern to the government and the Central Bank, so measures are being developed. Targeting inflation is one of our priorities.”Kremlin spokesman Dmitry Peskov told reporters. He said price increases were visible “in different segments” of the economy, particularly in air transport. The central bank is expected to raise its key rate again on Friday in an attempt to slow inflation.

The explosion of public spending, linked to orders in the military-industrial complex to equip the army in Ukraine and to the large bonuses paid to soldiers and their families, has for several months fueled a cycle of rising wages and household spending. At the same time, labor shortages in many sectors, caused by the departure of men to the front and the exile abroad of hundreds of thousands of others, have also fed this spiral.

The rapid rise in prices could push the Russian Central Bank to raise its key interest rate – already at the high level of 16% – at its next meeting on the subject, scheduled for July 26. Its governor Elvira Nabiullina acknowledged in early July that such a decision was clearly on the table: “The main topic of discussion will be the size of the rate hike”she said. However, several business leaders have already said they are opposed to such a scenario, which they believe could slow down economic activity.