The scene takes place in Yekaterinburg, the fourth largest city in Russia. Filmed by a surveillance camera, two masked individuals burst into a store to steal… butter. A precious loot, when we know that its price has jumped by more than 25% in one year. For part of the Russian population, purchasing basic necessities is becoming more and more complicated. Even the Governor of the Bank of Russia, Elvira Nabiullina, recognized this: inflation, she declared on October 25, should reach 8 to 8.5% at the end of the year, or “twice as much than the objective”. Worse, she sees “no sign of slowing down”. The reason? The war economy put in place by Vladimir Putin to crush Ukraine. While 40% of the national budget is devoted to defense and security, the Russian president will increase military spending by a further quarter in 2025, or 129 billion euros.
This war frenzy has consequences. As labor becomes scarce, wages jump, as do production costs. As a result, “overheated” demand is increasing faster than supply, hence the rise in prices, notes the Russian governor. A dangerous social configuration, especially as social spending is expected to drop drastically in 2025. For a large part of the Russian population, who are struggling to make ends meet, the situation could become tense. Remember that one in three Russians has no savings, according to a recent survey by the Levada Institute.
Crazy machine
Hence this question: can the crazy machine launched by Putin continue its momentum for a long time, while oil revenues are falling and the State, to complete its budget, will undoubtedly have to – like last year – take in end of the year in its sovereign fund, when it is normally used to pay pensions and infrastructure spending? If this trend continues, there will undoubtedly come a day when Vladimir Putin will have to explain to his people why he is financing the war with the money planned for his future…