by Martin Armstrong
Armstrong Economics
Russia’s CPI reached 9.5% this December as government spending has pulled the reigns away from the central bank. Inflation elevated from 8.9% YoY in November to 9.5%, slightly below expectations of 9.7%. Prices are up 1.3% on a monthly basis overall, but Russians are feeling the impact of war.
Services from 11.4% to 11.5% on the yearly while non-food goods are up from 5.7% YoY to 6.1% Prices at the grocery store have soared from 9.9% YoY to 11.1% as Russia struggles to find reasonably priced imports. Core inflation is up 1% monthly, but up 10% over the past four quarters. The central bank is lightyears away from its 4% inflation target. The spread between rates and inflation is a concerning 11.5%.
Russia’s Central Bank maintained its policy rate of 21% in December. This is not a money supply issue and government cannot curtail spending amid a rapidly escalating war effort.