The real level of inflation in Russia significantly exceeds the figures publicly announced by the Kremlin. In particular, food prices have risen by approximately 25%, according to a report by the Institute for the Study of War (ISW).
Source: PRYAMYI
Analysts note that the Russian authorities systematically conceal or understate the economic consequences of the full-scale war against Ukraine, Western sanctions, and mistakes in their own economic policy.
Vladimir Putin recently acknowledged that in 2025 Russia’s GDP growth amounted to only 1%, whereas in 2023 it was 4.1% and in 2024 — 4.3%. At the same time, he described the slowdown as “artificial” and explained it as allegedly deliberate actions by the government to curb inflation.
According to Putin, at the end of 2025 inflation fell to 5.6% after peaking at 9.6% in 2024. At the same time, already in January 2026, according to his own data, inflation rose to 6.4% year-on-year. He linked this to the increase in VAT from 20% to 22% starting January 1, 2026.
ISW emphasizes that the VAT increase was aimed at covering the federal budget deficit caused by excessive defense spending, while the financial burden was effectively shifted onto the population.
Analysts recorded a sharp rise in food prices — up to 25% both before and after the VAT increase, indicating a significantly higher real level of inflation than the Kremlin claims.
“The systematic distortion of inflation data is intended to create the illusion that the war against Ukraine and Western sanctions are not harming the Russian economy,” ISW concluded.
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