Higher inflation in Russia (in September compared to August) is almost certain to lead to increased spending on financing the war in Ukraine, according to the latest report from the UK Ministry of Defence, citing intelligence data.

The British side states that, including the significant increase in defense spending, "the Russian economy is likely at risk of overheating."

"This is highly likely to ensure inflation in Russia in 2024 remains above the target rate of 4 per cent. Continued high inflation is likely to erode real terms government spending, particularly in areas such as social care with below-inflation spending rises," the experts say.

Inflation in Russia increased to 6 percent in September compared to 5.3 percent in August of this year due to rising consumer prices, particularly on food and fuel. The Central Bank of Russia responded by raising the key interest rate by 2 percentage points to 15 percent. These are the highest levels since May 2022.