Introduction to Russia’s Economic Situation
It’s reasonable to assume that the minister is aware that Russia’s official GDP figures are enhanced by statistical manipulation. In a situation where the structure of the economy is shifting rapidly, prices for most goods are rising just as fast, even if measuring it accurately has proven difficult. In estimates, every product category includes a variety of brands with wide price ranges, and even the same brand can vary sharply in price between neighboring stores.
The Fight Against Inflation
And the fight against inflation might be winding down. The Central Bank of Russia has cut the key interest rate by three percentage points in the past two months, signalling at least a partial shift back towards stimulating economic growth. In simpler terms, the Central Bank, too, appears to fear a recession. The current rate of 18% is identical to the one that prevailed from July-September 2024 — and back then, it failed to rein in inflation. In effect, the aggressive attempt to crush price growth through a high interest rate appears to be over.
Monetary Policy
Over the past six months, monetary policy has indeed been tighter than at any time since the war began. From January to July 2025, the money supply (more precisely, the M2 monetary aggregate) grew by just 1.6% – compared to 5–6% during the same period in 2022–2024. But this austerity didn’t last long. Today, the money supply is 15% higher than it was a year ago. The inflationary impact of previous monetary expansion will not be offset in half a year.
GDP Growth
Another doubling of GDP of the sort that was once held up as a major policy goal has come and gone almost unnoticed. (Granted, the original idea implied real growth, not nominal.) “In 2024, our GDP for the first time exceeded 200 trillion rubles in nominal terms, nearly doubling from the 2020 level,” Prime Minister Mikhail Mishustin told lawmakers, trying to sound upbeat. But there’s little to celebrate: in the hyperinflationary chaos of 1992–1993, nominal GDP doubled every four months — if not faster.
Inflation Manipulation
Nominal GDP growth includes both real growth and inflation, and the two must be separated if the true picture is to be assessed. In the Russian case, inflation appears to be the primary driver: from the end of 2020 through the end of 2024, the money supply doubled from 58.7 trillion to 117.3 trillion rubles.
Real Inflation Rate
So what is the real inflation rate in Russia? Rosstat publishes two main indicators: the Consumer Price Index (CPI) and the GDP deflator. The CPI is relatively straightforward: it tracks the price of a fixed basket of goods over time, typically measured monthly. The composition of this basket is publicly known and rarely changes.
The GDP deflator, on the other hand, is more complex. Here, the “basket” comprises the entire gross domestic product, whose structure varies from year to year. The weight of each item is based on its most recent share in GDP. This method is highly labor-intensive and can only be carried out by a state statistical agency. In Russia, the deflator is calculated quarterly, published with a delay compared to the CPI, and frequently revised later.
Discrepancies in Inflation Measurement
It’s no surprise, then, that these different methods produce different results. For 2022, inflation measured by the Consumer Price Index stood at 12.2%, while the GDP deflator showed 18.1%. Depending on which measure is used, real GDP either shrank by 1.4% (based on the deflator) or grew by 3.8% (based on the CPI).
Why such a discrepancy? The CPI includes the prices of imported consumer goods but excludes investment and non-consumer goods. The GDP deflator, by contrast, covers the entire spectrum of goods and services produced domestically. Moreover, as an example illustrates, the deflator tends to overstate the weight of expanding sectors of the economy (regardless of whether they grow through output or price increases), while the CPI underrepresents them, relying on an outdated consumption basket.
Alternative Price Indexes
Economists skeptical of Rosstat’s methods often turn to alternative price indexes, which offer a different lens on real output dynamics. One of the better-known examples is the “Okroshka Index” — a calculation of how much it costs to make a pot (or four bowls) of the traditional cold soup. The index is published annually by the analytical group Chek Index and is frequently cited not only by pro-government media outlets but also by regional branches of the Bank of Russia.
Here’s what goes into the Chek Index recipe: 300 grams of radishes, 400 grams of potatoes, 5 eggs, 300 grams of cucumbers, 300 grams of boiled sausage, 100 grams of sour cream, 1 liter of kvass, plus one bunch each of green onions and dill. Prices are drawn from online cash register data (via a fiscal data operator) and averaged across product categories. In 2025, the index was up 14% year-over-year as of the second half of April.
Conclusion
In conclusion, understanding the true state of Russia’s economy requires digging beneath the surface of official GDP figures and inflation rates. The use of alternative price indexes, such as the Okroshka Index, provides additional insights into the dynamics of the economy. While the Central Bank of Russia has made efforts to combat inflation, the aggressive attempt to crush price growth through high interest rates appears to be over. As the economy continues to shift rapidly, it remains to be seen how these efforts will impact the real inflation rate and economic growth in the long term.
