Life in Russia

In the States, the press has covered much about the politics of Vladimir Putin. But very few of the major networks have said much about Russia's economy. Moscow has been regarded as one of the world's most expensive cities.

As the chief administrator of our Bible school in Moscow, I must pay attention not only to dollar exchange rates (and the dollar has been slipping against all currencies for a long time, now), but also to the changes in the local economy. Since 2006, the rate of inflation (consumer price index) has averaged at more than 10% annually. 2007 was no exception. Below is an excerpt from Forbes about Russia's economy.

Russia's political stability ... has resulted in job creation and stimulated economic growth, which is now approaching 8%. (Tom's note - the GDP is 8% -- which is huge) ....

One negative trend of 2007 is the steady rise in prices of consumer goods and food, a very dangerous development. The consumer price index surged 12%, but the price of certain foods has risen at a much faster pace--vegetable oil increasing by 150%, butter by 40%, milk by 30%, and grains and bread by 25%. This is not the result of a worldwide increase in food prices--Russian food prices are growing faster than world prices, even faster than in neighboring emerging market economies like China and India.

The rise in consumer prices is a result of increases in salaries, pensions, stipends and other social spending at a pace much higher than what economic growth allowed. This puts more rubles in the hands of Russians, but decreases the purchasing power of the currency.

The ironic thing: the average salary in Moscow is less than $800 / month. Go figure.