Financial crash about to hammer Putin: Russians begin panic-buying frenzy as costs explode

Putin vows to rid Russia of 'scum and traitors'

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The cost of products all the way from medicine to electronic devices has shot up as a result of the West’s response to Vladimir Putin’s invasion of Ukraine. Goods whose prices were capped and are reportedly not anymore are driving Russians to stock up in fear they will get even more expensive as the war continues.

Drastic changes in imported goods are anticipated, with the average price for new cars made by foreign manufacturers 16 percent higher last week than in February, according to the state statistics service.

Smartphones, meanwhile, had increased 12 percent; vacuum cleaners 17 percent, and televisions 20 percent.

According to analysts, food products are among the least likely to be impacted by Putin’s conflict with the West.

Since 2014, after the annexation of Crime, Russia restricted imports of some fresh products from Europe in retaliation for sanctions imposed over the seizure.

This led to a boost in national agricultural production, meaning the country’s biggest supermarkets stock a relatively large share of local goods as opposed to imported ones.

Yet, the cost of products such as sugar, bananas and tomatoes has climbed more than 15 percent since February, the state statistics service added.

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On Wednesday, in his so far clearest acknowledgement of the economic harm Western sanctions were doing on Russia, Putin said: “I understand that rising prices are seriously hitting people’s incomes.

“Therefore, in the near future, we will decide to increase all social benefits.”

Speaking at a meeting about providing support to Russian regions via vidoe link, he said this would include raising pensions and salaries as we well as state payouts to the disadvantaged.

Despite trying to reassure the regions there will be no large-scale shortage of goods, arguing the situation will make the nation less reliant on the West, in the long run, he admitted: “Of course, the new reality will require deep structural changes to our economy.

“I will not conceal that they will be difficult. They will lead to a temporary rise in inflation and unemployment. Our task is to minimize such risks.”

The Kremlin has set up a hotline for complaints about unfair price rises.

But the cost-of-living crisis, as the ruble continues to plunge in value, seems hard to avoid.

At the close of trading on Wednesday, the ruble gained 1.9 percent on the day to close at 108 per dollar and gained 0.7 percent versus the euro to close just below 117.7.

On foreign exchanges, it was bid recently at 91 per dollar and traded at 97, up more than 13 percent on the day.

But although the Russian currency rose against the dollar in Moscow and offshore trading, volumes remained thin and other assets continued to be un-tradable.

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Russian ruble falls to all-time low following economic sanctions

And on Thursday, all eyes turned to Russia’s failure to pay coupons on sovereign debt.

The deadline for the payments on the country’s dollar bonds drew to a close Wednesday, and there were no signs that holders of the debt had received their cash.

The $117million interest on the two bonds was expected to be settled before the end of the day in New York.

Thursday, thus, marked the start of a 30-day grace period for settlement after which Moscow could default on its foreign sovereign debt for the first time since the Bolsheviks, over a century ago, refused to service or recognize the czar’s debts.

Putin’s handling of the coupon payments could be a good indicator of how he intends to manage relationships with global investors going forward.

The president described Russia’s economic pain, with the ruble down 23 percent so far this year, as the ultimate goal of the West’s plan to make Russia a “weak dependent country”.

He told government ministers on Wednesday: “The West doesn’t even bother to hide that their aim is to damage the entire Russian economy, every Russian.

“Behind the hypocritical talk and today’s actions of the so-called collective West are hostile geopolitical goals.

“They just don’t want a strong and sovereign Russia.”

The plan of NATO and its allies, the dictator added, is to “violate its territorial integrity; to dismember Russia in a way that suits them”.

As his attacks in Eastern Europe enter the third week, Putin warned: “But this economic blitzkrieg against Russia has failed.

“They don’t know our history or our people.”

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