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Russia’s Economy Under Pressure: Balancing Military Spending and Inflation

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As Russia intensifies its military spending, the nation’s economy is showing significant signs of strain. From skyrocketing prices on essential goods to high interest rates, the impact on everyday Russians is becoming more visible.

The Price of Butter and Basic Necessities

Basic goods like butter, eggs, and potatoes have turned into luxury items for many. In 2024 alone, butter prices have risen by nearly 30%, leading to thefts and black-market resales. Supermarkets have even introduced anti-theft devices for butter — a striking symbol of the times.

Inflation and Interest Rates Soar

Russia’s inflation is accelerating, with interest rates reaching 21%, the highest in two decades. While Central Bank Governor Elvira Nabiullina works to stabilize the ruble, high borrowing costs are stifling businesses, and purchasing power continues to decline.

Military Spending Takes Priority

The Kremlin’s focus on military funding is evident, with defense budgets hitting record highs. In 2025, military and internal security spending will account for 40% of the national budget, outpacing allocations for healthcare, education, and social services.

Supply Chain Disruptions and Imports

Sanctions and disrupted supply chains have exacerbated inflation. With domestic production faltering, the Kremlin is importing overpriced essentials from countries like Turkey and Iran. However, these imports come at a significant cost to consumers.

Real Estate and Corporate Struggles

The end of mortgage subsidies and rising interest rates have caused a collapse in property sales. Meanwhile, over 200 shopping malls face bankruptcy, and major developers are seeking state bailouts.

The Path Forward

While the Kremlin shows no signs of reducing military spending, potential solutions such as easing sanctions or attracting foreign investment could stabilize the economy. For ordinary Russians, relief is urgently needed as they grapple with inflation and diminishing economic stability.

Russia’s economic future hinges on its ability to balance military ambitions with the everyday needs of its citizens.

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