6 charts that explain why Russia’s economy is in freefall – and what it means for you
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Version 0 of 1. The Russian central bank raised interest rates to 17 per cent at midnight last night, up from 10.5 per cent previously: This was a desperate attempt to stop the run on Russia’s currency, the Rouble, which has been falling like a stone against the dollar: This is creating immense pain for parts of the Russian domestic economy and stoking the risk of a domestic financial crisis. The Rouble has been falling mainly because of the sudden drop in the global oil price: Russia’s economy is heavily reliant on oil exports so a collapse in the oil price is disastrous for Moscow. But falling oil prices are generally positive for countries that are not major net exporters which (despite our North Sea oil industry) includes the UK. Inflation today in the UK fell to just 1 per cent, its lowest in 12 years, helped by falling energy prices: Falling inflation means that annual wage rises could soon be higher than annual increase in prices, easing the cost of living: When the black line crosses the red line it will mean average (inflation adjusted) wages are growing again for the first time since the financial crisis. However, as the chart above also shows, the black line has been falling too, meaning that any real terms pay rises for workers do not look set to be spectacular. And by the time of next May’s election real wages will still be well below where they were in 2008, or even 2010 when the Coalition took office:
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