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With fast-weakening rouble and fears for future, Russians rush to shop

Russians are bracing for a bleak future of spiraling inflation, economic hardship, and even tighter restrictions on imported goods. Cities across Russia appeared to be calm, with little evidence of the crisis wreaking havoc on the financial sector and markets. Except for the long lines of people looking to stock up on products – mostly high-end items and hardware – before shelves run out or prices continue to rise.

This week, a long line of shoppers snaked outside an IKEA store near Moscow in bright sunshine. Similar scenes played out across Russia as families rushed to spend their rapidly depreciating roubles at the Swedish retailer that is leaving the crisis-torn country.

Russians are bracing for a bleak future of spiraling inflation, economic hardship, and even tighter restrictions on imported goods.

The rouble has lost a third of its value this week as a result of unprecedented Western sanctions imposed in response to Russia’s invasion of Ukraine. The moves froze a large portion of the central bank’s $640 billion in reserves and barred several banks from the global payment system SWIFT, causing the rouble to plummet.

“I made the purchases that I had planned to make in April today. A Voronezh friend also advised me to buy something for her “Viktoriya Voloshina, a shopper in Rostov, a town 217 kilometers (135 miles) from Moscow, told Reuters. Voloshina stated that she was looking for office shelves and tables, as well as shopping for a friend from another town. “My heart is breaking,” she said, adding, “my heart is breaking.”

Dmitry, another Moscow resident, bemoaned the city’s rapid price increases. “The watch I wanted to buy now costs around 100,000 rubles, up from around 40,000 a week ago,” he said, declining to give his surname. However, the spending surge seen this week may have peaked.

While there is no obvious sign of panic, the loss of rouble savings and the doubling of interest rates to 20% will put pressure on mortgage holders and consumers.

Financial conditions, which reflect the availability of credit in the economy, have tightened brutally this year, according to Oxford Economics, which predicted that domestic demand would fall by 11% by the end of the year and unemployment would rise by 1.9 percentage points in 2023.

According to Zach Witlin, an analyst at Eurasia Group, sanctions are already affecting consumers through price increases and disruptions in digital payments.

While consumers are not directly targeted, “fear and caution are exaggerating the impact,” he added, with the departure of foreign brands such as IKEA creating a “snowball effect.”

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