The Russian economy will be the most affected since the Cold War Business

Prices rose more than 4% in the first two weeks of March alone, putting the pariah state on track for a 30% annual inflation rate by early 2023, according to CEBR calculations for the Ukrainian government.

Meanwhile, even if wages rise by 10% a year, real incomes will fall by around 18% over the next 12 months and by more than a quarter by the end of 2024.

Russia is a major exporter of food and energy, so basics are likely to remain available, but imports and luxuries are likely to disappear from shelves.

CEBR’s Douglas McWilliams said the scale of the living standards crisis was of the same magnitude as that suffered by Iranians when the country was under Western sanctions, resulting in inflation ranging from 9% in 2016 to nearly 40%. % Last year.

He said there was “some leeway” for the Kremlin to use its resources to limit rising prices, but such a move could only be partial and temporary.

“With a budget surplus from high oil revenues, there is scope for increased subsidies, but at the cost of increased market distortions,” McWilliams said.

“Wages could be increased further, but to prevent Russia from becoming uncompetitive, this would probably have to be accompanied by a fall in the value of the ruble. This reduction would itself be inflationary.

“The magnitude of the budget surplus, however, means that the scope for alleviating more than half of the pressure on living standards is limited and even that could probably only be sustained for about a year. So the pressure on the Russian standard of living will likely be harsh and hard to compensate for.”