Russia's Inflation Is Leveling Out While America Hits 40-Year High

While Russia's Central Bank announced a "faster" slowing of inflation and smaller-than-expected decline in economic activity on Friday, the U.S. Labor Department reported the highest year-over-year Consumer Price Index (CPI) increase in 40 years.

The Bank of Russia issued a statement saying that it had cut a key interest rate by 150 basis points to 9.50 percent per annum, or annually. While it acknowledged that the "external environment for the Russian economy remains challenging," it said that "inflation is slowing faster and the decline in economic activity is of a smaller magnitude than the Bank of Russia expected in April."

Meanwhile, the Friday inflation report from the U.S. Bureau of Labor Statistics showed that the CPI increased 8.6 percent in the year ending in May. It was the "largest 12-month increase since the period ending December 1981," the bureau said.

While the two countries' newly-reported inflation changes cannot be linked, they provide more insight into the current economic standing of two major players in the diplomatic fallout of the Russia-Ukraine war. Following the widely-condemned invasion of Ukraine in late February, the U.S. and other western countries moved to impose unprecedented sanctions on Russia, including a U.S. embargo of Russian oil and direct sanction on Russian President Vladimir Putin himself.

U.S., Russia Inflation Reports
While Russia’s Central Bank announced a “faster” slowing of inflation and smaller-than-expected decline in economic activity on Friday, the U.S. Labor Department reported the highest year-over-year Consumer Price Index (CPI) increase in 40 years. Above, gasoline prices are posted at a gas station in Washington, D.C. on May 26, 2022. Nicholas Kamm/AFP via Getty Images

The U.S. year-over-year inflation CPI increase of 8.6 percent in May surpassed the 8.3 percent increase reported in April.

U.S. inflation was on the rise long before Russia launched its attack on Ukraine, but the war has not helped the economic situation for Americans. Prices for certain foods and crude oil climbed in the wake of the invasion, worsening high gas costs in the U.S. that were also already increasing before the war.

President Joe Biden has repeatedly pointed fingers at Putin as part of the reason behind the price increases. In a statement on the new inflation report, Biden said that "Putin's Price Hike hit hard in May here and around the world."

"Prices at the pump are a major part of inflation, and the war in Ukraine is a major cause of that," the statement read. "The United States is on track to produce a record amount of oil next year, and I am working with the industry to accelerate this output. But it is also important that the oil and gas and refining industries in this country not use the challenge created by the war in Ukraine as a reason to make things worse for families with excessive profit taking or price hikes."

As for Russia, the Central Bank said that current inflation is "appreciably below" its April forecast.

As of June 3, annual inflation was at 17 percent, down from 17.8 percent in April, and recent data indicates rises in consumer prices were low in May and early June, the bank said.

"The decline in headline inflation is largely due to a correction in prices for a small group of goods and services, after they went up sharply in March," the bank's statement read. "This comes as a result of ruble exchange rate movements and the tailing-off of the surge in consumer demand in the context of a marked decline in inflation expectations of households and businesses. At the same time, current rates of price growth in the greater part of the consumer basket, although having dropped, are still significantly above 4 percent annualized."

Newsweek reached out to the Kremlin for comment.