Gasoline Price Spike Adds to War’s Economic Toll for Russians

Russian gasoline prices increased by 1.3% in the week ending March 17, 2024, contributing to a broader inflationary pressure that has prompted caution from the Central Bank of Russia. Governor Elvira Nabiullina highlighted that reduced output from Ukrainian strikes on Russian oil refineries has emerged as a significant new inflation risk. This surge follows a previous 1.1% increase in fuel prices observed in the preceding week. The overall inflation rate in Russia for the year to March 11, 2024, stood at 7.64%, exceeding the central bank's 4% target and reinforcing expectations that the bank will maintain its key interest rate at 16% during its next monetary policy meeting scheduled for March 22, 2024. Analysts at Sberbank CIB noted that the refinery disruptions are likely to keep fuel prices elevated for at least the next two months, potentially impacting consumer spending and the broader economy. The government has implemented measures such as temporary export bans on gasoline and diesel to stabilize domestic prices, but these have had limited success in mitigating the upward trend.