Inflation in Russia is now rising at a significantly faster rate than in Ukraine, according to UK intelligence.
Even though Vladimir Putin currently occupies almost 20% of Ukrainian land – and continues to bombard the neighbouring country with missiles – it looks like Moscow is actually not coping that well with the war it started.
According to the UK’s Ministry of Defence (MoD), Russia’s annual average inflation rate for 2024 is expected to be around 7.9% while Ukraine is expected to come in at 5.8% for the year.
If a country’s inflation – the rate at which prices rise over a set period – goes up by too much, it can lead to a major cost of living crisis, and if it’s too low, the economy does not grow. That’s why the Bank of England tries to keep it at 2%.
So this update will not be welcome news in Moscow.
“Increased government spending will highly likely intensify existing inflationary pressures in the economy, with an annual average inflation rate of 7.9% forecast for 2024,” the MoD posted on X.
Meanwhile, for Ukraine, “the IMF has forecast an average annual inflation rate of 5.8% for 2024, down from a peak of around 20% in 2022.”
In a further blow to the Russian president, Ukraine’s economy is bouncing back almost three years after Putin’s invasion. It’s expected to have grown by around 3% in the end of 2024.
The MoD said: “This continues the trend of wartime recovery after Ukraine’s economy contracted by around 29% in 2022, followed by real economic growth of 5% in 2023.”
Despite the heavy Western sanctions against it. Russia will also see its economy grow by 3.6%, driven by government military spending.
The intelligence officers said that’s part of a “continuing trend of growth since the initial economic shock of the war” almost three years ago.
The MoD suggested that would not last, though, noting: “Economic growth [in Russia] is forecast to slow in 2025 due to pressures from inflation, labour shortages and sanctions.”
Putin has resorted to recruiting North Korean troops to fight on his behalf in the war, a move which prompted the US and the UK to give Ukraine permission to use their long-range missiles to hit sites within Russian borders.
Both countries are also spending a lot on defence right now.
Kyiv is reportedly spending 60% of its state finances on the sector next year to a bid to fight of Russia’s advances, while Moscow putting 32% of its total budget into defence – a record for the country’s post-Soviet era.