Russias economy is struggling from sanctions, western officials say. Heres why – National [Video]

Russia’s economy is showing signs of strain amid high inflation and a tightening labour market, which G7 and European officials say is proof that western sanctions over the war in Ukraine are working.

The Central Bank of Russia, which is independent from the government, delivered a new warning on Friday. The bank’s governor Elvira Nabiullina said the economy remained “substantially overheated,” after members raised its key interest rate to 18 per cent — the highest level in over two years — and said annual inflation has risen to nine per cent.

“For inflation to begin decreasing again, monetary policy needs to be tightened further,” the bank said in a statement, hinting at even more rate hikes.

The rate decision came days after eight European finance ministers wrote in The Guardianthis week that Russia was experiencing what they called a “re-Sovietization of the economy.” They said reports of GDP growth, which the Kremlin has …