An illustration photo taken on September 11, 2024, shows Russian ruble banknotes. – Russia’s militarised economy is set to enter a new phase of slower growth, posing fresh challenges for the Kremlin two and a half years into its full-scale military offensive on Ukraine. (Photo by Alexander NEMENOV / AFP)
Moscow, Russia — The pace of inflation in Russia slowed slightly in August but was still more than double the central bank’s target, official data showed Wednesday, as huge spending on the Ukraine conflict kept upwards pressure on prices.
Russia has spent billions of dollars on its soldiers and arms industry since sending troops into Ukraine, a spending surge that has ballooned the size of its economy but sent prices soaring.
The annual rate of inflation was 9.05 percent in August 2024, slightly down from 9.13 percent in July but well above the central bank’s target of four percent, according to data from the Rosstat state statistics agency.
READ: Russian inflation accelerates to 8.6% in June
The data comes a month after the agency said the rate of Russia’s economic growth dipped in the second quarter of 2024, expanding at four percent compared with 5.4 percent in the first quarter.
The figures have raised some concern Russia could be headed for a period of “stagflation”, when prices are rising but the rate of economic growth is low or non-existent.
Over the last year, the Russian central bank has aggressively raised interest rates in a bid to cool what it has warned is an economy growing at an unsustainable rate due to the massive increase in government spending on the Ukraine offensive.
It recently said that growth was now coming down, while it hoped the peak of inflation had passed.
Russia is set to spend almost nine percent of its GDP on defence and security this year, a figure unprecedented since the Soviet era, according to President Vladimir Putin.