The Russian economy continues to show signs of decline as Russia continues to prioritize a "wartime economy" over stability. This is stated in a material by the Institute for the Study of War (ISW), reports UNN.
Details
It is noted that on November 27, Russian dictator Vladimir Putin signed a law to increase the value-added tax (VAT) - a federal tax levied on most Russian goods and services in the domestic market - from 20 to 22 percent, which will likely reduce the federal budget deficit.
The Kremlin has been struggling with high inflation since Russia's full-scale invasion of Ukraine in February 2022, and US Treasury Secretary Scott Bessent noted on October 26 that Russia's inflation rate exceeds 20 percent, which sharply contrasts with the official statistics of the Russian central bank, which claims that the annual inflation rate in Russia is only 8.2 percent.
They also assess Putin's signing of a law to raise the minimum wage to 27,093 rubles per month (approximately $349) from January 1, 2026.
The increase in Russia's minimum wage indicates that Russia's current anti-inflationary measures are stagnating, and consumer purchasing power across Russia is weakening, forcing Russia to raise the minimum wage to keep up with rising prices for goods.
They conclude that the VAT increase will likely lead to further inflation, while simultaneously reducing cash flow in the Russian economy and further stagnating Russia's economic growth.
Recall
Recently, the Central Bank of Russia reported a deterioration in the financial condition of enterprises and an increase in problem debt. The net profit of companies decreased by 23% in the first eight months of 2025.